Practice - Service out of the jurisdiction - Action or contract governed by English law

Saad Investments Company Ltd v Al-Sanea: Queen's Bench Division, Commercial Court (Mr Justice Walker): 14 October 2011

The defendant was a national of Saudi Arabia and resided there. He was a former officer of the claimant company, which had been created to hold some of the offshore assets of the defendant and his family. In April 2008, the defendant granted the claimant a put option in relation to 32,600,000 shares in a housebuilding company, B. The agreement between the parties stated that it was governed by the law of England and Wales, and that each party submitted to that jurisdiction. A freezing order had been obtained in the Cayman Islands (Cayman) by a third party, which was due to be discharged in the near future.

At the time of the instant proceedings, the claimant had been placed in liquidation. The claimant sought a freezing order against the defendant in support of the proceedings. The defendant sought declarations as to jurisdiction and sought to set aside an order of September 2011, allowing the claimant to serve out of the jurisdiction. It was common ground that for the application to serve out of the jurisdiction to succeed, it would be necessary for the claimant to demonstrate that it had a reasonable prospect of success in its claim. The defendant submitted that the claimant's documentation contained inaccuracies, which rendered the application to serve out of the jurisdiction invalid.

With regard to the application for a freezing order, the claimant submitted that as a former officer of the claimant, the defendant had an obligation to co-operate with the liquidators but had failed to do so, and that he had failed to comply with orders obtained against him in Cayman. It further contended that the defendant had taken steps to make it difficult to serve papers on him, and that he had refused to pass to the liquidators papers relevant to their investigations.

The court ruled: (1) Having considered all the evidence, including points made by the defendant regarding inaccuracies in the documentation, there were at least substantial arguments that the inaccuracies relied upon did not invalidate what had been done by the claimant (see [20], [21] of the judgment).

On the evidence, the claimant's substantive claim had a reasonable prospect of success (see [22] of the judgment). Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 applied; BAS Capital Funding Corpn v Medfinco Ltd [2003] All ER (D) 434 (Jul) applied; Awal Bank BSC (in admin) v Al-Sanea [2011] All ER (D) 284 (May) applied.

(2) In the instant case, there was a significant risk of dissipation. On the evidence, taking into account the defendant's arguments, the claimant had shown such a risk of dissipation of assets as, when taken in conjunction with other relevant factors, including both the circumstances of the present application and the strength of the claimant's claim, made it appropriate to grant a freezing order of the nature sought (see [34] of the judgment). The freezing injunction would be granted (see [34] of the judgment).

Thane Investments Ltd v Tomlinson [2003] All ER (D) 496 (Jul) considered; Mobil Cerro Negro Ltd v Petroleos de Venezuela SA [2008] All ER (D) 310 (Mar) considered.

Stephen Atherton QC and Tom Smith (instructed by Linklaters LLP) for the claimant; Richard Morgan QC and James Aldridge (instructed by Harbottle & Lewis LLP) for the defendant.