England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		4th August 2008

JUDGMENT MR JUSTICE WALKER:

1. This is an application by the claimant, Mediterranean Shipping Company ("MSC"), for a worldwide freezing order. Unusually the application is made on notice to the respondent. The reason for that is this. The respondent, Ningbo Toptrade Import and Export Company Limited ("Ningbo"), is a Chinese company which has already been involved in litigation with MSC in relation to the matters which are the subject of the claim. That litigation includes proceedings in New York where MSC has been granted what is known as a "rule B" attachment of certain assets of Ningbo. Ningbo has applied to the New York court to set aside that attachment.
2. An acknowledgement of service was filed by Clyde & Co on behalf of Ningbo in the present proceedings. However, in recent days Messrs Clyde & Co have applied to come off the record. They state that they have been told by their client that it does not wish them to represent it and further they state that they have not been put in funds. I have today accordingly made an order removing Messrs Clyde & Co from the record and thus Ningbo is effectively acting in person in these proceedings.
3. Despite the notice to Clyde & Co, and despite Clyde & Co having stated to MSC and to the court that they have given notice to Ningbo's European representative, there has been no appearance on behalf of Ningbo today.
4. If Ningbo had been a company incorporated in this country or with a significant presence in this country, I would have had no hesitation in granting the worldwide freezing order that is sought. That is because the material that has been put before me shows cogent evidence of fraud on the part of Ningbo. It is fraud with an international character and which, subject to the points that I shall mention shortly, would clearly, in my view, warrant a worldwide freezing order. Ningbo, however, is not a company incorporated in this country, nor is it a company with any significant presence here.
5. Mr Karia, who appears on behalf of MSC, acknowledges that in these circumstances it is his duty as advocate to draw to my attention matters concerning both jurisdiction and the exercise of my discretion.
6. In relation to jurisdiction, an application notice has been issued by the second defendant, Mr Grant, objecting to the court assuming jurisdiction over him. The chronology was that these proceedings began as proceedings against the first defendant, OMG International Limited ("OMG"), alone. An application for summary judgment was dealt with by Teare J on 8 October 2007. That judgment was granted. It was in part for a money sum. As I shall explain, that money sum represented only a small amount of the total claim. The remainder of the judgment gave declarations that MSC was entitled to an indemnity against OMG in various respects and dealt with other matters.
7. At about the same time, an application came before Gloster J seeking to join Mr Grant as second defendant, and Ningbo as third defendant. For that purpose it was necessary to seek permission to effect service of the claim form on Ningbo out of the jurisdiction in China. By order dated 9th October 2007, Gloster J granted permission to join Mr Grant and Ningbo and granted permission to serve Ningbo out of the jurisdiction.
8. Mr Karia observed that the application notice issued on behalf of Mr Grant, which was an application notice seeking to set aside the joinder, has not in fact been progressed, although it was issued some months ago. An initial point taken in that application notice is a suggestion that, after judgment, there were no matters in dispute in the proceedings. As to that, Mr Karia made two points. First, even if that were right, it would not prevent joinder: see the case of Dunwoody Sports v Prescott [2007] 1 WLR 2343 at paragraph 23. The basis for jurisdiction was that the third defendant, Ningbo, was a necessary and proper party in the proceedings between MSC and the first defendant, OMG. In that regard, Mr Karia pointed out that there was cogent evidence that the fraud was masterminded from London.
9. Further, and this is the second point that Mr Karia makes in this regard, there may be matters in dispute despite the judgment, for it is in part declaratory. As I have said, the declarations included declarations as to an entitlement to an indemnity, in particular in relation to the eighteen containers of copper which are at present held by the Chinese Customs authorities. There will be a need to quantify the amounts to be paid under the indemnity and the issues which arise in that regard are common to issues arising in the claim against Ningbo and also the claim against the second defendant, Mr Grant. There is much yet to be done before the precise amount of the indemnity can be worked out.
10. Moreover on jurisdiction, Mr Karia points out that Clyde & Co on behalf of Ningbo acknowledged service. That acknowledgement of service was late, but MSC takes no point in that regard. The time for applying to set aside service on grounds of jurisdiction, set by CPR 58.7(2), has a limit of 28 days after the filing of the acknowledgement of service. The acknowledgement of service was filed on 3 July 2008 and thus time expired on 31 July 2008. No application has been made to set aside service on grounds of jurisdiction. It is irrelevant, submits Mr Karia, for these purposes that Clyde & Co have now come off the record.
11. Turning to the exercise of my discretion, Mr Karia acknowledged that this entailed consideration of issues of comity and made it appropriate to consider the links with England in accordance with the analysis in my judgment in Mobil Cerro Negro v PDV SA [2008] 1 Lloyds Rep 684 at paragraphs 86 to 119, pages 697 to 704. This is not a case where a claimant asserts special jurisdiction under section 25 of the Civil Jurisdiction and Judgments Act. That is not of itself determinative, but it is a powerful discretionary factor that the court has substantive jurisdiction for the reasons I have outlined. Further, there is cogent evidence, not only that there was a fraud in relation to these eighteen containers, but also that the fraud was masterminded from London. Moreover, the need for international cooperation in the present case is particularly strong as there is also cogent evidence that the same parties were involved in additional frauds involving other shipowners. In effect, there is strong evidence of an international conspiracy involving Ningbo. If the New York court holds that the rule B attachment should be set aside, then this court is the only court which can provide the necessary disclosure and freezing relief. No breach of comity arises so far as New York is concerned, as can be seen from the affidavit of Mr Peter Skoufalos sworn on 15 July 2008.
12. I accept Mr Karia's submissions. I am satisfied that in these circumstances the material before me shows a case involving cogent evidence of fraud on an international scale. I have considered whether I should require security for the cross-undertaking in damages which MSC must give. MSC is the second largest container shipping line in the world. I am satisfied that it has sufficient resources to meet any order that may be made under the cross-undertaking and I do not consider it necessary to require that security be given.
13. I have also raised with Mr Karia the question of service of the order, as Clyde & Co have come off the record and as it is important that this order should be served on Ningbo as soon as possible. I propose that there should be included in my order a provision for service by an alternative method. The details of that provision should be inserted in the proposed order before it is submitted to me for signature this afternoon.