Foreign orders no defence to contempt of court


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In the long running matter of Masri v Consolidated Contractors and others [2011] EWHC 1024 (Comm) the court had made orders in support of a judgment, including two receivership orders, various freezing orders and orders requiring the provision of affidavits of assets.

The defendants were Lebanese and, after the English orders were made against them, they obtained orders from the Lebanese courts to the effect that they could not provide the information, nor account to the court appointed receivers, unless the initial order had obtained recognition or exequatur in Lebanon. In the circumstances, compliance with the English court’s orders would expose the defendants to criminal sanctions in Lebanon. The defendant companies were placed under a Lebanese judicial administration which also prevented compliance with the English orders.

The defendants argued that, since they owed their primary allegiance to the Lebanese courts, they could not be found to be in contempt, or should not be punished for their contempt, for their failure to comply with the English orders.

In response, the English court held that it was not the case that the English court was unable to require a person to do, or not to do, an act which may be in breach of the law of some foreign jurisdiction. The court has discretion. When making the orders which were the subject of a contempt application, the English court may already have taken into account the possibility of such a conflict. It would be at that stage for the defendant to consider whether the order may cause him problems in a foreign jurisdiction, and he can then try to persuade the English court not to make the order, or to vary it.

The court was concerned that foreign companies incorporated in “jurisdictions of convenience” would easily be able to obtain blocking orders. Instead the court “should give little weight to the protestation of contemners that they are bound by restrictions obtained at the behest and with the approval of themselves and their shareholders. A party cannot suffer himself to be bound in chains, from which he could, if he wished, release himself”.

Accordingly, the defendants were held to be guilty of contempt, with sanctions to be imposed at a further hearing.

Paul Howcroft, partner, Fladgate LLP (phowcroft@fladgate.com)

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