Practice - Pre-trial or post judgment relief - Freezing order

Parbulk II AS v PT Humpuss Intermoda Transportasi TBK and other companies: Queen's Bench Division, Commercial Court (Mr Justice Gloster): 30 November 2011

The claimant was a special purpose fund established under the laws of Norway. By a charterparty of December 2007, on an amended BARECON 2001 form, the claimant as owner chartered a vessel to the third respondent, ‘Heritage’ on a bareboat charter for 60 months. The charterparty was subject to English law and London arbitration under London Maritime Arbitrators Association rules. Heritage was a vehicle company incorporated in Panama and a subsidiary of a Singaporean company, HSTPL, which in turn was a subsidiary of HIT, an Indonesian company which was the ultimate holding company in the Humpuss group. Heritage’s obligations were guaranteed by HIT (the guarantee). 

Following Heritage’s repeated failures to pay hire, various disputes arose between the parties. In June 2009, the claimant terminated the charter. The respondents countered that it had not been entitled to do so. The claimant brought arbitration proceedings against Heritage, which were held in Singapore, and an action in the High Court in London against HIT under the guarantee, which was governed by English law. It succeeded in both actions: the arbitrators held that the claimant had been entitled to terminate the charter for repudiatory breach, and the High Court held that it was entitled to succeed on the guarantee. Heritage applied to challenge the award pursuant to section 69 of the Arbitration Act 1996 (the 1996 act). 

Its application was outstanding at all material times (ultimately being dismissed on 8 November 2011). The claimant obtained permission to enforce the award as a judgment against Heritage, pursuant to section 66 of the 1996 act. It also obtained a worldwide freezing injunction against all three respondents, and an ancillary disclosure order regarding the location and value of assets worth in excess of $30,000. The freezing order was continued at a hearing in June 2011. At that hearing no argument was addressed to whether or not it would be appropriate to make a freezing order against HSTPL by reason of the fact that it was a Singaporean company outside English jurisdiction; the locus of the debt it owed to Heritage was also out of the jurisdiction; it had no assets within the jurisdiction; and there was no relevant service gateway as set out in civil procedure rule PD 6B. 

After the draft judgment was circulated, but before it was handed down, the defendants drew attention to the recent Court of Appeal decision on an application for permission to appeal in Linsen International Ltd and others v Humpuss Sea Transport plc Ltd and others ([2011] EWCA Civ 1042) (Linsen). The handing-down was adjourned and further argument heard on jurisdiction and service.

Three issues arose following the Linsen judgment. Issue (i) was whether the court had jurisdiction under CPR 6.36 and PD 6B, paragraphs 3.1(3) or 3.1(10) to make an order for service out of the jurisdiction of an arbitration claim form seeking worldwide freezing orders against a third party who was not a cause of action defendant. Issue (ii) was, if not, did the fact that HSTPL did not challenge jurisdiction when it acknowledged service of the arbitration claim form, mean that HSTPL had consented to the exercise by the court of its in personam jurisdiction to make a worldwide freezing order, if appropriate. Issue (iii) concerned, on the assumption that the court had in personam jurisdiction against HSTPL, whether it was appropriate to make a worldwide freezing order against HSTPL.

The court ruled: (1) Prior to the further submissions, the court would have concluded that in circumstances where a defendant/judgment debtor (that was, a cause of action defendant (CAD)) against whom it was appropriate to make a freezing order at the suit of a claimant, had a debt, or other receivable owing to it by a third party NCAD (non cause of action defendant), or a claim, or potential claim, against a third party NCAD, the English court had jurisdiction to grant a freezing order against the third party NCAD, in appropriate circumstances, to restrain the NCAD from dissipating its assets up to the amount of its debt to, or the claim by, the CAD or judgment debtor. 

Such an order was doing no more than protecting the right, or contingent right, of the claimant (whether by a third party debt order, charging order, appointment of a receiver or liquidator etc) to obtain satisfaction of its judgment debt against the defendant by means of attachment, or other collection, of the proceeds of the latter’s receivable from, or claim against, the third party. 

Whether the court would grant such an order against the third party would be a matter for the exercise of its discretion, depending on the particular circumstances of the case. Normally, if there was no reason to doubt the propriety of the third party, it might well be sufficient, for example, to injunct the defendant from collecting the receivable, otherwise than by instructing the third party to pay it into a designated account.

In other circumstances, it might be appropriate, at an interlocutory stage, to appoint a receiver over the receivable/claim against the third party in order to enable the receiver to collect it and pay it into court, or an escrow account, or otherwise preserve the receivable/claim from dissipation by the defendant/judgment debtor. 

However if, for example, the circumstances showed collusion, or impropriety, or some participation, on the part of the third party, in attempts by the defendant/judgment debtor to render itself judgment proof, then it might be appropriate for a freezing order to be granted against the third party itself (see [56] of the judgment).

(2) In the light of the Linsen decision, however, there was some doubt as to whether there was any territorial limitation to the provision 'a claim is made to enforce any judgment or arbitral award'. In the instant case, however, it was not necessary to determine which approach to follow, since although HSTPL had clearly accepted the jurisdiction of the English court’s in personam jurisdiction, the court as a matter of discretion would decline to make any worldwide freezing order against it. There were no substantial grounds for serving HSTPL out of the jurisdiction. 

The evidence did not suggest that the claimant had any direct claim against HSTPL, let alone a claim actionable in England. Third, even if a third party was subject to the in personam jurisdiction, there might still be subject matter jurisdiction concerns if an English court sought to impose obligations on such persons in relation to acts done abroad regarding property outside the jurisdiction. Fourth, there was no realistic ability on the part of the court to monitor HSTPL’s business activities and payments elsewhere. The freezing order would however be continued limited to HSTPL’s assets within the jurisdiction (see [89]–[97], [98] of the judgment).

Masri v Consolidated Contractors International Co SAL [2008] 2 All ER (Comm) 1099 applied; Linsen International Ltd v Humpuss Sea Transport PTE Ltd [2011] All ER (D) 64 (Sep) considered.

Duncan Matthew QC and Charlotte Tan (instructed by Wikborg Rein LLP) for the claimant; David Joseph Esq (instructed by Lawrence Graham LLP) for the defendants.