Court refuses claimant’s application that defendant bring monies into the jurisdiction

Sam Claydon

In Vitol SA v Morley, the Commercial Court refused an application that a defendant which was subject to a worldwide freezing order bring a sum of money into the jurisdiction to pay into court. The claimant alleged that the defendant had paid sums to a company connected with it (the “Company”) despite its position that it had limited means. The claimant acknowledged that the freezing order had given it some protection, but argued that the Company’s bank would not be subject to the freezing order if it was outside the jurisdiction.

The court refused the claimant’s application. It was open to the claimant to seek to enforce the freezing order in a foreign jurisdiction, in respect of which the court gave short shrift to the claimant’s argument that the territorial limitations on the freezing order did not give it sufficient protection. The order sought was also mandatory in nature, which is in sharp contrast to the prohibitory nature of the freezing order. This presented a difficulty in that the defendant had not had the opportunity to respond to the order so the court could not verify whether the defendant held the sum in question. This unfairly exposed the defendant to the penalty of contempt despite the fact that it could plausibly be impossible for the defendant to comply with the terms of the order. The claimant argued that the order could be made conditional upon the defendant having the relevant funds (and thus avoiding the problems associated with contempt), but the court found that the order would still be founded upon the defendant’s alleged dishonesty. It was held therefore that the current freezing order in place gave the claimant sufficient protection at the current stage of proceedings.

It appears that the court acknowledges the territorial limitations of freezing orders, but will be reluctant to extend their jurisdictional ambit. On one analysis this reluctance also extends to mandatory orders of the type seen here as that arguably impinges on the jurisdiction of the foreign court. On the other hand, the reluctance to impose such mandatory orders appears to arise out of practical and public policy considerations that to expose a defendant to an action for contempt in circumstances where it would be impossible for him/her to comply with the order would be unjust.

Vitol SA v Morley [2015] EWHC 613 (QB).  The judgment in this case is now available to PLC subscribers here, and is also available on Lexis and Westlaw.

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