Summary

The court was bound by Choudhary v Bhattar [2009] EWCA Civ 1176, [2010] 2 All E.R. 1031 to hold that it was not permitted to order the service of committal proceedings on a director domiciled in a non-Member State under Regulation 44/2001 art.22(5), notwithstanding contrary decisions of the European Court. However, the court could and should permit service of the committal application on the director in Saudi Arabia under CPR r.6.36 on the grounds that he was a necessary or proper party to contempt proceedings and the English court was the proper forum.

Facts

In committal proceedings brought by the applicant (K) against two companies (D) and the respondent director (S), the court was required to determine its jurisdiction to order S's imprisonment and the service of a committal application on him.

S was domiciled in Saudi Arabia and D were incorporated in Saudi Arabia and Bahrain. D had issued proceedings in the United Kingdom against defendants, including K, alleging, inter alia, breach of confidence and unlawful means conspiracy, and were granted an interim injunction preventing the defendants from disclosing certain information. D undertook to preserve original hard drives containing the information, and were later ordered to deliver them to their solicitors, upon which they would be released from the undertaking. The defendants applied to discharge those orders on the basis that, when applying for them, D had not made full and frank disclosure, had misled the court in their evidence and submissions, and had not complied with the preservation undertaking and the drives delivery order. The court discharged the orders, having found that S had deleted files from the drives. K applied for a declaration that D were in contempt of court and an order that S be committed to prison for his role as a director in that contempt pursuant to CPR r.81.4. K served the committal application on D, who submitted to the court's jurisdiction, and was permitted to serve the application on S through service on D. Notice of the committal application was deemed to have been served on him in October 2013. S disputed the court's jurisdiction over him. It fell to be determined whether (i) the court's power to order that a director be imprisoned for a company's contempt applied to directors who were outside the jurisdiction; (ii) S could be served with the committal application under Regulation 44/2001 art.22(5); (iii) the court could and should permit service of the committal application under CPR r.6.36 on the ground that S was a necessary or proper party to contempt proceedings

Held

(1) If CPR r.81.4 did not apply to foreign directors outside the jurisdiction, the court's power to deal with contempt of its orders by companies with foreign directors would be much reduced and the efficacy of, for example, many worldwide freezing orders and anti-suit injunctions would be compromised. The House of Lords in Masri v Consolidated Contractors International Co SAL [2009] UKHL 43, [2010] 1 A.C. 90 did not directly consider whether a director out of the jurisdiction could be liable for contempt of court, but Lord Mance's speech provided some guidance and implicitly endorsed Seagull Manufacturing Co Ltd (In Liquidation) (No.1), Re [1993] Ch. 345 in which a director living outside the jurisdiction was publicly examined, although he drew attention to the impracticality of enforcement, Masri and Seagull considered. Problems with enforcement did not, however, outweigh the public interest engaged by contempt proceedings (see paras 24, 32-35 of judgment). (2) The case of Choudhary v Bhattar [2009] EWCA Civ 1176, [2010] 2 All E.R. 1031 was authority for the proposition that art.22 of the Regulation did not apply to a case where the person to be sued was not domiciled in a Member State, notwithstanding that that decision was contrary to three European Court decisions, Universal General Insurance Co (UGIC) v Group Josi Reinsurance Co SA (C-412/98) [2001] Q.B. 68, Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) (C-281/02) [2005] Q.B. 801 and Land Oberosterreich v CEZ as (C-343/04) [2006] 2 All E.R. (Comm) 665 considered. The failure in Choudhary to refer to those cases rendered it per incuriam, but the doctrine of precedent nevertheless compelled the instant court to follow it. Accordingly, art.22 did not cover the committal application against S because he was not domiciled in a Community jurisdiction, Choudhary followed (paras 44, 46, 49, 53-56, 59). (3) Notice of the committal application against S was a "claim form" within the meaning of CPR 6.36.There was a "real issue" between K and D within the meaning of CPR PD 6B para.3.1, and S was a necessary or proper party to the committal application against D. K had a strong prospect of establishing that D were guilty of contempt, there was no dispute that S had been and remained a director and officer of D, and there was a reasonable prospect that S would be held to have aggravated the contempt and his part in it by giving dishonest evidence when K and other defendants applied to discharge the orders made against them. Further, the English court was the proper place for committal proceedings against S. In those circumstances, it was appropriate for the court to exercise its jurisdiction to permit service of the committal application and associated documents on S in Saudi Arabia. The court had power to grant permission for service out of the jurisdiction with retrospective effect so as to legitimise service that had already taken place without permission, National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) (No.2) [2000] 1 W.L.R. 603 and Nesheim v Kosa [2006] EWHC 2710 (Ch), [2007] W.T.L.R. 149 applied. To give retrospective permission was sensible and would not disadvantage S (paras 69, 71-72, 75-79, 80).

Judgment accordingly