An Application for a Disclosure Order Between Arcelormittal North America Holdings Llc Plaintiff v (1) Essar Global Fund Ltd (2) Essar Capital Ltd Defendants

• Jurisdiction: Cayman Islands
• Judge: Justice Kawaley
• Judgment Date: 16 November 2021
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO. FSD 2 OF 2019 (IKJ)

In the Matter of an Application for a Disclosure Order

Between

Arcelormittal North America Holdings Llc

Plaintiff

and

(1) Essar Global Fund Limited

(2) Essar Capital Limited

Defendants

Before:

The Hon. Justice Kawaley

CAUSE NO. FSD 2 OF 2019 (IKJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Norwich Pharmacal Order-granted to enable plaintiff to obtain evidence in aid of enforcement of foreign arbitration award-application to set aside on grounds of material change of circumstances-whether order final or interlocutory — appropriate test for establishing grounds to set aside-whether grounds for setting aside made out-relevance of pending appeal — Grand Court Law sections 11–11A — Court of Appeal Rules (2014 Revision) rules 12(3), 12(5) — Grand Court Rules, preamble, paragraph 4.1 — Grand Court Rules Order 45 rule 11

Appearances:

Lord Falconer QC of counsel instructed by Mr Paul Smith, Ms Anya Allen and Ms Rhiannon Zanetic of Harneys, on behalf of the Plaintiff

Mr Vernon Flynn QC of counsel instructed by Mr William Jones and Ms Nour Khaleq, Ogier, on behalf of the Defendants

IN CHAMBERS

RULING ON APPLICATION TO SET ASIDE ORDER

Introduction

1 The acronyms of the substituted and original Plaintiffs AMNAH and AMUSA, read together, seem to echo the attitude each Plaintiff has displayed as aggrieved award creditors throughout the present proceedings: “I am not amused”. Because of the strong legal policy leaning towards effectively enforcing foreign judgments and arbitration awards, there is a need for judges to balance applying this legal policy with legal objectivity. The present proceedings have presented unique challenges in this regard. In granting a case management stay of the present application on October 5, 2020, I observed 1:

“12. While it was said to be common ground that the Defendants' Set-Aside Summons to set aside the NPO was arguable, I made it clear in the course of argument that I was quite flummoxed by the spectre of being invited to set aside an Order that the Defendants had on a previous occasion (at the hearing on 29 May 2019 when the Defendants were represented by different Leading Counsel) submitted was final, while the parties were awaiting judgment on the Defendants' own appeal.”

2 From the beginning of Mr Flynn QC's oral submissions, I peppered the Defendants counsel with a series of questions which doubted the validity of his arguments. The Defendants' counsel unflinchingly stood by his opening position, however. I was initially inclined to accept the Plaintiff's case that the Defendants' present application was potentially an abuse of process and to dismiss it without further consideration at the end of the hearing. I was however concerned that the strength of my provisional views had compromised the fairness of my assessment of the Defendants' application which appeared to raise legal issues which were not illumined by any direct authority. Moreover, the present application was initially filed in somewhat unusual circumstances while an appeal was pending before the Court of Appeal. I accordingly decided that the application deserved a considered judgment.

3 The Defendants applied by Summons dated May 1, 2020 for the following substantive relief:

• “1. The Norwich Pharmacal Order of the Honourable Justice Kawaley dated 31 May 2019 (the ‘NPO’) be set aside.

• 2. The Plaintiff's Ex Parte Originating Summons dated 19 January 2019 be dismissed.”

4 They did so against the following procedural background:

• • January 14, 2019: AMUSA obtains a Norwich Pharmacal Order in the “English 2019 Proceedings”;

• • January 19, 2019: the original Plaintiff, ArcelorMittal USA LLC (“AMUSA”) obtains the NPO on an ex parte basis having obtained an ICC Award against a subsidiary of the First Defendant, Essar Steel Ltd (“Essar Steel”/ “Award Debtor”) on December 19, 2017 in Minnesota (“Award”);

• • May 31, 2019: the Defendants' application to set aside the NPO on legal jurisdictional grounds is refused. The Court indicates its view that the NPO is a final order for appeal purposes;

• • June 20, 2019: the Defendants file a Notice of Appeal;

• • July 17, 2019: this Court conditionally stays execution of the NPO pending appeal;

• • November 6, 2019: the Court of Appeal hears AMUSA's appeal;

• • December 30, 2019: AMUSA serves the “English Conspiracy Claim”/the “English Proceedings” (commenced in or about early November 2019 against the 1 ^st Defendant (“EGFL”) and other related parties);

• • March 20, 2020: Henshaw J dismisses AMUSA's application for a Worldwide Freezing Order (“WFO”) on the grounds of the absence of a good arguable case (the “Henshaw Judgment”);

• • April 7, 2020: the Cayman Defendants write to the Court of Appeal indicating their intention to apply to this Court to discharge the NPO on the grounds that the English Conspiracy Proceedings showed the NPO was not needed. Because such an application might make the pending appeal judgment academic, the Court of Appeal was being notified;

• • April 15, 2020: AMUSA invites the Court of Appeal to proceed to deliver its judgment because the “intended application to set aside the Order is not relevant to the issues before the Justices of Appeal …Any application to set aside the Order would be a separate matter for consideration by the Honourable Justice Kawaley in due course…”;

• • May 1, 2020: the Clerk to the Court of Appeal confirms that the Court of Appeal will proceed to deliver its judgment. The Defendants file their set-aside Summons;

• • August 7, 2020: the Defendants indicated to AMUSA that they intended to proceed with their Summons rather than awaiting delivery of the pending Court of Appeal decision;

• • August 19, 2020: AMUSA applies for a case management stay of the set-aside Summons;

• • September 8, 2020: this Court grants temporary case management stay of Defendants' Summons 2;

• • March 22, 2021: AMNAH is substituted for AMUSA as Plaintiff;

• • May 3, 2021: the Court of Appeal dismisses the Defendants' appeal against the NPO (“CICA Judgment”);

• • May 6, 2021: the Court of Appeal refuses leave to appeal to the Privy Council;

• • June 7, 2021: the Defendants apply to the Privy Council for permission to appeal;

• • August 18, 2021: AMNAH commences the New York Avoidance Claim;

• • September 7, 2021: the Defendants assert the New York Avoidance claim provides further grounds for setting aside the NPO on the grounds that it was not needed.

5 The present Summons raises the following issues of law and practice which could not directly be answered by reference to any local or foreign authority:

• (a) whether Norwich Pharmacal Orders (“NPOs”) are final or interlocutory, both generally and/or specifically as regards the grounds on which NPOs may be set aside;

• (b) whether NPOs are a hybrid form of order in relation to which a bespoke continuing review jurisdiction, analogous to that applicable to interim freezing injunctions, applies so that the trial judge retains the competence to set-aside NPOs made on an inter partes basis on the grounds of a material change of circumstances.

6 It seemed clear that if NPOs are final orders for review purposes that this Court had no jurisdiction to set-aside the NPO on the grounds of material change of circumstances alone. On the other hand if NPOs are interlocutory in nature for review purposes, if not otherwise, a factual evaluation of whether or not the English Conspiracy Proceedings and the New York Avoidance met the requirements for setting aside an inter partes interlocutory orders had to be carried out.

THE RESPECTIVE SUBMISSIONS

The Defendants' Submissions

Final or interlocutory and applicable test?

7 In the Defendants' Skeleton Argument, Mr Flynn QC advanced two reasons why the NPO should not be regarded as a final order for review purposes:

“ 20. First, the fact that the NPO is to be regarded as a final order for one purpose does not necessarily mean that it must so regarded for another, different, purpose:

20.1. In the context of permission to appeal, the distinction between interlocutory and final orders is defined by reference to rule 12 of the Court of Appeal Rules (2014 Revision)… which (at 12(1)) states that ‘for all purposes connected with the appeals to the Court of Appeal, a judgment or order shall be treated as final or interlocutory in accordance with subrules (2) to (7)’ (emphasis added). A conclusion that that a particular order is a final order within the meaning of rule 12 does not therefore dictate that it must be regarded as a final order for any purpose other than one connected with appeals to the Court of Appeal…

21. Second, an NPO is a highly unusual form of order, which has features of both a final and an interim order:

• 21.1. An NPO is not an order sought in the context of an existing domestic claim. It is free-standing relief, and is therefore sought by way of Originating Summons. Once an NPO has been granted, the substance of the relevant action has been substantially disposed of. These features are indicative of an NPO being a final order.

• 21.2. However, the procedure which the Court may adopt in granting an NPO (and which it adopted in this case) is indistinguishable from that applicable to an application for urgent interim relief. Here, the NPO was originally granted at an ex parte hearing, and was then continued on the return date. However, the return date itself bore no resemblance to a full a trial on the merits. The NPO itself was made on the basis that both parties would have permission to apply.

• 21.3. The adoption of an essentially interlocutory procedure has important consequences. For example, in order to obtain the NPO, the Plaintiff needed to satisfy the Court that the order was necessary for it to be able to seek legitimate redress in respect of relevant alleged wrongdoing. ²³ However, the question of necessity did not receive...