QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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(1) AB INTERNATIONAL (HK) HOLDINGS PLC LTD AB (AUSTRALIA) PTY LTD |
Claimants |
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AB CLEARING CORPORATION LTD CD AB FINANCE LTD AB GROUP LTD AB ATLANTIC LTD EF FINANCIAL SERVICES CORPORATION LTD AB EUROPE LTD AB GLOBAL HOLDINGS CO LLC |
Defendants |
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Mr Nicholas Peacock QC & Mr Jonathan Allcock (instructed by Barker Gillette) for the First, Second, Fourth, Fifth, Sixth & Eighth Defendants
Ms Rebecca Stubbs QC (instructed by Baker & McKenzie LLP) for the Third & Seventh Defendants
Hearing dates: 3 & 4 June 2015
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Crown Copyright ©
Mr Justice Phillips:
The background facts
The relief sought by the claimants
i) that the defendants provide the claimants with full access to the trading platform software used in relation to their customers;ii) that CD and third defendant pay to the second claimant $10.44m (or such other sum as it shows to be outstanding), said to be the total of unauthorised transfers from the second claimant to the third defendant between 20 August 2014 and 1 April 2015.
iii) that CD reinstate (or procure the reinstatement of) a $3 million revolving credit facility provided to the first claimant under clause 4 of the first addendum.
iv) that the defendants comply with clause 5.8 of the JVA, which provides that they shall not accept customers who primarily reside in or trade from China;
v) that the defendants disclose and provide within 7 days the information and documents requested in a letter from Innoinvest (advisers engaged by the second claimant) to the third defendant dated 3 March 2015.
i) the third defendant disputed that any client monies were obtained by way of unauthorised transfers (and that allegation was not seriously pursued by the claimants at the hearing).ii) it was, however, common ground that, if the second claimant terminated outstanding transactions, the third defendant would be obliged to return all remaining client monies to the second claimant. The third defendant confirmed that, as at the date of the hearing, those sums had fallen to about US$1,946,000, the reduction being due to losses incurred by the second claimant's clients as a result of their trading.
iii) the third defendant expressed its wish to terminate its relationship with the second claimant and its willingness to transfer all remaining client funds to the second claimant in such circumstances, but also expressed concern that it might later be alleged that it was on notice of a risk that the second claimant would misappropriate those monies for its own use. The third defendant therefore issued an application dated 26 May 2015 seeking directions as to the return of the client monies, that application being listed with the claimants' application on 3 and 4 June.
iv) at the hearing the third defendant, through its counsel, Ms Rebecca Stubbs QC, pointed out that, on the termination of the outstanding client trades, the third defendant would stop supplying its pricing feed to the second claimant. As the claimants still required that feed for the second claimant's ongoing business, Mr Gee withdrew the claimants' demand for the return of the client monies, again requesting me to adjourn the claimants' application in that regard. I refused that application for the same reasons I refused to adjourn the claim for the order referred to in paragraph 9(i) above. I did, however, adjourn the third defendants' application for directions with liberty to restore, taking the view that the third defendant was entitled to seek such directions if and when the claimants renewed their demand.
The relevant test
"(1) Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings.
(2) Those matters are—
(a) the taking of the evidence of witnesses;
(b) the preservation of evidence;
(c) making orders relating to property which is the subject of the proceedings or as to which any question arises in the proceedings—
(i) for the inspection, photographing, preservation, custody or detention of the property, or
(ii) ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property;
and for that purpose authorising any person to enter any premises in the possession or control of a party to the arbitration;
(d) the sale of any goods the subject of the proceedings;
(e) the granting of an interim injunction or the appointment of a receiver.
(3) If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets.
(4) If the case is not one of urgency, the court shall act only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the tribunal) made with the permission of the tribunal or the agreement in writing of the other parties.
(5) In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively."
i) The jurisdiction is limited to making orders necessary for the preservation of evidence or assets (paragraph 47 of the judgment of Clarke LJ);ii) However, whilst the purpose of the orders must be the preservation of evidence or assets, the court has powers to make any order it might make under s44(1) (in other words, any order the court may make in its general jurisdiction) which it thinks is necessary for that purpose (paragraph 47).
iii) Further, the term "assets" in s44 should not be construed narrowly, but should be read as extending beyond property and goods to include choses of action, including contractual rights (paragraph 57). Thus, in Cetelem, the Court of Appeal upheld a mandatory order requiring the defendant to deliver an application for approval to the Russian Central Bank as being necessary to preserve the claimant's contractual right to acquire an interest in a Russian bank.
The application for disclosure
i) The asset which requires preservation is the business of the JVC and its subsidiaries, that business being placed in jeopardy because it was continuing to incur expenses of running the front-office of the joint venture, but was not receiving the corresponding profits from the resulting trading because CD's companies were failing to account for those profits.ii) An order for disclosure from the court, in particular of trade tickets evidencing any hedging, is necessary to preserve the business of the JVC because it will "speed up" the arbitration process, enabling the claimants to mount interim applications in the arbitration as soon as possible.
iii) The urgency is that, unless the claimants are able to obtain speedy relief and an award from the arbitrators, the JVC's business will collapse and the asset will be lost.