Essar Global Fund Ltd and Essar Capital Ltd v Arcelormittal USA LLC

• Jurisdiction: Cayman Islands
• Judge: Goldring, P.,Rix,Martin, JJ.A.
• Judgment Date: 03 May 2021
• Court: Court of Appeal (Cayman Islands)

Essar Global Fund Limited and Essar Capital Limited

and

Arcelormittal USA LLC

(Goldring, P., Rix and Martin, JJ.A.)

C.A.

Civil Procedure — disclosure — Norwich Pharmacal order — deliberate evasion of enforcement of foreign arbitral award is arguable wrongdoing for purposes of seeking Norwich Pharmacal order

Civil Procedure — disclosure — Norwich Pharmacal order — jurisdiction to grant equitable relief not displaced by availability of statutory regime under Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 for obtaining evidence for use in foreign proceedings

Held, dismissing the appeal:

(1) It was well established that the requirements for the grant of a Norwich Pharmacal order were that (i) a wrong had been carried out or arguably carried out by an ultimate wrongdoer; (ii) an order was needed to enable action to be brought against the ultimate wrongdoer; and (iii) the person against whom the order was sought must (a) be mixed up in so as to have facilitated the wrongdoing; and (b) be able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued or other legitimate redress for the wrongdoing to be obtained. The ultimate wrongdoer in this case was said to be ESL and the wrong asserted by the respondent was concealing and/or stripping assets with the effect of frustrating or evading enforcement of the ICC award. The concealment or stripping of assets by ESL had not been established. The respondent asserted that such conduct had “arguably” been carried out. The test for obtaining Norwich Pharmacal relief when wrongdoing had not been established was not mere arguability (which would include a case which was barely capable of serious argument) but the existence of a good arguable case. There should be sufficient evidence of wrongdoing to make it just to order disclosure against a respondent. The need to avoid imposing too high a threshold was exemplified by a case such as the present, where the disclosure sought was of information necessary to enable the applicant to succeed against the wrongdoer; in such a case, it would be self-defeating to require the applicant to establish that he would have the better of the argument against the wrongdoer without the benefit of the very information that he sought to obtain by the Norwich Pharmacal order (paras. 16–23).

(2) The judge had sufficient material before him to justify his finding that a good arguable case of wrongdoing had been established. The wrongdoing in question was the wilful evasion by ESL of the ICC award. The matter turned on the way in which ESL's undoubted failure to discharge any part of the award was to be characterized. Such a failure could be innocent or wrongful. In the present case, the respondent was able to point to circumstances which, if not explained, would suggest that the failure to pay amounted to deliberate evasion of the liability. Those circumstances included a reduction in ESL's assets from US$3.166bn. shown in its 2015 accounts to US$2.4m. stated in its evidence in the English freezing order proceedings; the purported writing-off of a debt of US$1.487bn. owed to ESL by the first appellant in return for ESL purportedly buying its own shares from the first appellant (and to effect a reduction in capital); and an apparent attempt by the Essar group to prefer some creditors over others by shielding bank financing from existing and potential litigants, the respondent not being included in the preferred creditors. In addition, ESL's conduct in the arbitration was capable of giving rise to an inference that it intended to frustrate the arbitration process, including enforcement of any adverse award. These matters were not explained away by ESL or the appellants. Taken together, they were adequate to raise a good arguable case, which did not depend merely on the respondent's suspicions, that ESL's failure to take steps to satisfy the award was attributable to deliberate evasion and not to an innocent inability to pay. Accordingly, the challenge to the judge's conclusions on the wrongdoing point failed (paras. 36–43).

(3) The appellants' jurisdiction point also failed. For the following reasons, the court considered that the judge correctly found that the jurisdiction to grant equitable relief had not been displaced by the availability of the statutory regime under the Evidence (Proceedings in Other Jurisdictions) Order for obtaining evidence for use in foreign proceedings. First, the Evidence Order only concerned the giving of evidence for the purposes of foreign proceedings, whereas the Norwich Pharmacal jurisdiction could not as a matter of principle relate to evidence at all. In the case of Norwich Pharmacal, the distinction was drawn between the equitable remedy of discovery (which was the remedy utilized in Norwich Pharmacal) and the ability to compel the giving of evidence. Provided that care was taken to confine the Norwich Pharmacal jurisdiction to its proper scope, there could in principle be no overlap between that jurisdiction and the statutory regime relating to evidence in foreign proceedings, and therefore no reason to regard the former as excluded by the latter. Secondly, the basis of the Norwich Pharmacal jurisdiction was not an obligation to provide evidence but a duty to provide information about wrongdoing. There was no obvious reason why that duty should be confined to domestic wrongdoing. Nor was it easy to see why legislation dealing with the giving of evidence in foreign proceedings should be treated as impliedly excluding jurisdiction to order the provision of information necessary to enable foreign proceedings to come into existence at all, such as information about the identity of the wrongdoer. The reference in the Evidence Order to contemplated proceedings must be narrowly construed and could not apply more generally to proceedings which a putative plaintiff was thinking of pursuing. The Evidence Order was to be treated as impliedly excluding Norwich Pharmacal relief in support of foreign proceedings only, if at all, where those proceedings were on foot or where the applicant had available to him in the relevant jurisdiction procedures for pre-action disclosure or the provision of non-documentary evidence. It should go without saying that Norwich Pharmacal relief was unlikely to be granted where an applicant could have started his projected foreign proceedings, or applied for pre-action relief, but had chosen not to do so in the hope of obtaining a Norwich Pharmacal order instead of using the Evidence Order procedure. Thirdly, s.11A of the Grand Court Act (2015 Revision) gave the court power to grant interim relief in relation to foreign proceedings. Although the relief in this case was not sought under this section, it clearly provided a basis for the grant of relief in support of foreign proceedings. On the face of it, that relief would include Norwich Pharmacal relief. The existence of this power made it impossible to assert that the overall intention of the legislature was to exclude Norwich Pharmacal relief in support of foreign proceedings. For these reasons, the appellants failed on the jurisdiction point and the appeal would be dismissed (paras. 54–65).

Cases cited:

(1) ArcelorMittal USA LLC v. Ruia, [2020] EWHC 740 (Comm), referred to.

(2) Bols Royal Distilleries BV v. Superior Yacht Servs., [2006] UKPC 45; [2007] 1 W.L.R. 12; [2007] 1 All E.R. (Comm) 461; [2007] 1 Lloyd's Rep. 683; [2007] 1 CLC 308, referred to.

(3) Braga v. Equity Trust Co. (Cayman) Ltd., 2011 (1) CILR 402, referred to.

(4) Canada Trust Co. v. Stolzenberg (No. 2), [2002] 1 A.C. 1; [2000] 3 W.L.R. 1376; [2000] 4 All E.R. 481; [2001] CLC 118, referred to.

(5) Discover Investment Co. v. Vietnam Holding Asset Management Ltd., 2018 (2) CILR 424, referred to.

(6) Felderhof v. Deloitte & Touche Inc., 2011 (2) CILR 35, referred to.

(7) Four Seasons Holding Inc. v. Brownlie, [2017] UKSC 80; [2018] 1 W.L.R. 192; [2018] 2 All E.R. 91, referred to.

(8) Gianne v. Miller, 2006 CILR N [26]; on appeal, 2007 CILR N [10], referred to.

(9) Law Debenture Trust Corp. v. Ural Caspian Oil Corp. Ltd., [1995] Ch. 152; [1994] 3 W.L.R. 1221; [1995] 1 All E.R. 157, considered.

(10) Mitsui & Co. Ltd. v. Nexen Petroleum UK Ltd., [2005] EWHC 625 (Ch); [2005] 3 All E.R. 511, followed.

(11) NML Capital Ltd. v. Chapman Freeborn Holdings Ltd., [2013] EWCA Civ 589; [2013] 1 CLC 968, referred to.

(12) Ninemia Maritime Corp. v. Trave Schiffahrts G.m.b.H. und Co. K.G., The Niedersachsen, [1984] 1 All E.R. 398; [1983] 2 Lloyd's Rep. 600; [1983] Com. L.R. 234, referred to.

(13) Norwich Pharmacal Co. v. Customs & Excise Commrs., [1974] A.C. 133; [1973] 3 W.L.R. 164; [1973] 2 All E.R. 943; [1973] F.S.R. 365; [1974] R.P.C. 101, applied.

(14) Pan American World Airways Inc.'s Application, In re, [1992] Q.B. 854, referred to.

(15) R. (Omar) v. Foreign & Commonwealth Affairs Secy., [2013] EWCA Civ 118; [2014] Q.B. 112; [2013] 3 W.L.R. 439; [2013] 3 All E.R. 95; [2013] A.C.D. 65, considered.

(16) Ramilos Trading Ltd. v. Buyanovsky, [2016] EWHC 3175 (Comm); [2016] 2 CLC 896, considered.

(17) Rio Tinto Zinc Corp. v. Westinghouse Elec. Corp., [1978] A.C. 547; [1978] 1 All E.R. 434; sub nom. Westinghouse Elec. Corp. Uranium Contact Litigation M.D.L. Docket 235, [1978] 1 C.M.L.R. 1000, referred to.

(18) Shlaimoun v. Mining Technologies Intl. Inc., [2011] EWHC 3278 (QB); [2012] 1 W.L.R. 1276, considered.

(19) Singularis Holdings Ltd. v. PricewaterhouseCoopers, [2014] UKPC 36; [2015] 1 A.C. 1675; [2015] 2 W.L.R. 971; [2015] BCC 66; [2014] 2 BCLC 597, referred to.

(20) Smith Kline & French Laboratories Ltd. v. Global Pharmaceutics Ltd., [1986] RPC 394, considered.

(21) Systems Design Ltd. v. Equatorial Guinea (President), 2005–06 GLR 65, considered.

(22) UVW v. XYZ, BVI HC (Com) 108 of 2016, Eastern Caribbean Supreme Ct., October 27th, 2016, referred to.

(23) United Company Rusal plc v. HSBC Bank plc, [2011] EWHC 404...