Re BTU Power Company (in official liquidation)

• Jurisdiction: Cayman Islands
• Judge: (Mottley, Rix and Newman, JJ.A.)
• Judgment Date: 20 November 2015
• Court: Court of Appeal (Cayman Islands)
• Date: 20 November 2015

Court of Appeal

(Mottley, Rix and Newman, JJ.A.)

IN THE MATTER OF BTU POWER COMPANY (in official liquidation)

ALMAZEEDI

and

PENNER and SYBERSMA

J. Guthrie, Q.C. and S. Dawson for the appellant;

F.B.W. Tregear, Q.C. and M. Goucke for the respondents.

Cases cited:

(1) Belize Bank Ltd. v. Att. Gen. (Belize), [2011] UKPC 36, referred to.

(2) Bolkiah v. Brunei Darussalam, [2007] UKPC 62, considered.

(3) Helow v. Home Secy., [2008] 1 W.L.R. 2416; [2009] 2 All E.R. 1031; 2008 S.L.T. 967; 2008 S.C.L.R. 830; [2008] UKHL 62, referred to.

(4) Locabail (UK) Ltd. v. Bayfield Properties Ltd., [2000] Q.B. 451; [2000] 1 All E.R. 65; [2000] H.R.L.R. 290; (1999), New L.J. 1793, considered.

(5) Millar v. Dickson, [2002] 1 W.L.R. 1615; [2002] 3 All E.R. 1041; 2002 S.C. (P.C.) 30; 2001 S.L.T. 988; [2001] H.R.L.R. 59; [2001] UKPC D 4, considered.

(6) Office of Fair Trading v. Abbey National plc, [2010] 1 A.C. 696; [2009] 3 W.L.R. 1215; [2010] 1 All E.R. 667; [2010] 2 All E.R. (Comm) 945; [2010] 1 Lloyd”s Rep. 281; [2010] 1 C.M.L.R. 44; [2009] UKSC 6, referred to.

(7) Porter v. Magill, [2002] 2 A.C. 357; [2002] 2 W.L.R. 37; [2002] 1 All E.R. 465; [2001] UKHL 67, applied.

(8) Smith v. Kvaerner Cementation Foundations Ltd., [2007] 1 W.L.R. 370; [2006] 3 All E.R. 593; [2006] C.P. Rep. 36; [2006] EWCA Civ 242, referred to.

(9) Yiacoub v. R., [2014] 1 W.L.R. 2996; [2014] UKPC 22, followed.

(10) Yukos Capital Sarl v. OJSC Rosneft Oil Co. (No. 2), [2014] Q.B. 458; [2013] 3 W.L.R. 1329; [2013] 1 All E.R. 223; [2013] 1 All E.R. (Comm) 327; [2012] 2 Lloyd”s Rep. 208; [2012] 2 C.L.C. 549; [2012] EWCA Civ 855, referred to.

Legislation construed:

Cayman Islands Constitution Order 2009 (S.I. 2009/1379), Schedule 2, s.7(1):

‘Everyone has the right to a fair and public hearing in the determination of his or her legal rights and obligations by an independent and impartial court within a reasonable time.’

Civil Procedure—fair trial—bias—fair-minded and informed observer would not necessarily conclude that judge appointed in foreign jurisdiction risks bias merely because foreign government has interest in litigation and is responsible for judicial appointments—subsequent appointment of individual personally involved in litigation as minister responsible for judicial appointments, however, creates risk of apparent bias—trial unfair and judge to recuse himself

Constitutional Law—judiciary—independence—appointment of Cayman judge in foreign jurisdiction in which government has significant influence over judiciary no necessary indication that judge lacks independence in domestic proceedings in which foreign government involved

The joint official liquidators of a company applied to the Grand Court for the company to be wound up on the just and equitable ground.

The company was based in the Cayman Islands and operated as an investment fund. The investors in the company included a number of Qatari government entities, who presented a winding-up petition in November 2011.

In January 2012, the Grand Court (Cresswell, J.), on a petition from the respondents (the joint official liquidators), ordered that the company be wound up. A number of proofs of debt were subsequently submitted to the respondents by the appellant (the company”s director and chief executive officer), which were rejected; the appellant appealed to the Grand Court, which also rejected the proofs of debt in February 2014.

The appellant later discovered, in June 2014, that Cresswell, J. had been appointed as a judge of the Qatar International Court and Dispute Resolution Centre (‘the QICDRC’) in June 2013. Appointments to the QICDRC were made by the Council of Ministers, which was chaired by the Minister of Finance, and judges could also be dismissed by the Council. The appellant therefore sought leave to appeal against the orders made in the present proceedings by Cresswell, J., namely the orders winding up the company and rejecting the proofs of debt, on the basis that

the judge had not constituted an independent and impartial tribunal due to his links to the Qatari government.

The appellant submitted that leave to appeal should be granted as (a) the appeal concerned his fundamental right to a fair trial (as guaranteed by the Constitution, s.7(1)) and the possibility of judicial bias; and (b) the delay in bringing the appeal was due to the fact that he had only discovered the judge”s appointment to the QICDRC in June 2014. Further, he submitted that the appeal should be allowed as the fair-minded and informed observer would have considered that there was a risk of bias as (a) the Qatari government entities had played a significant role in the winding-up proceedings; (b) the Qatari entities” role in the proceedings had been directed by Mr. Al Emadi, who had threatened the appellant during the litigation and was later appointed Minister of Finance, and thus had responsibility for judicial appointments and dismissals; and (c) there were concerns that the Qatari government did not respect judicial independence and impartiality as it purportedly exercised undue influence in domestic legal proceedings.

The respondents submitted that leave to appeal should not be granted as the application was late and an appeal would undermine the winding up of the company, which had been ongoing since 2011. In addition, the appeal should be dismissed as (a) the appellant had no standing to challenge either the winding up or the rejections of the proofs of debt as he had no claim against the shareholders (as they played no part in proceedings after the appointment of the liquidators) or the liquidators (as they were not the shareholders” representatives, but court-appointed administrators); (b) the fair-minded and informed observer would have taken account of Cresswell, J.”s distinguished record, his judicial oaths of impartiality and the likelihood that he was unaware of the link between the parties and the Qatari government and concluded that there was not a risk of apparent bias; (c) Mr. Al Emadi had not been appointed Minister of Finance until June 2013 and was therefore not in office at the time of the making of the winding-up order; and (d) significant disruption would be caused if the winding-up order were set aside as substantial progress had been made in winding up the company.

Held, allowing the appeal:

(1) The orders made subsequent to June 2013 would be set aside as the judge should have disclosed his appointment as a Qatari judge; a fair-minded and informed observer would have concluded that, after the appointment of Mr. Al Emadi as Minister of Finance, there was a danger that s.7(1) of the Constitution would be infringed as a result of the judge”s independence and impartiality having been compromised. As Minister of Finance, Mr. Al Emadi was responsible for the appointment of judges to the QICDRC, and there was therefore a risk of apparent bias as (a) he had been personally involved in the winding-up proceedings due to his other appointments in Qatar, and had a history of aggressive litigation; (b) it was unusual for a government minister to be responsible for judicial

appointments; and (c) there were international concerns that the Qatari government had interfered in judicial decision-making (para. 50; para. 86; paras. 89–90; para. 93; paras. 95–96).

(2) The orders made prior to June 2013, including the order to wind up the company, would not be set aside as before that time there had been no danger of apparent bias as Mr. Al Emadi had not been appointed as Minister of Finance, and therefore his role could not be taken into account when considering the possibility that the judge had been biased. Prior to June 2013, therefore, a fair-minded observer would not necessarily have considered it troubling for the judge to be involved in proceedings in which the government of Qatar had an interest, particularly as the judge had had a long and distinguished career. The QICDRC had, in addition, been established in order to provide an independent forum in which to resolve disputes involving foreign investors in Qatar, and therefore it was unlikely that the Qatari government would have jeopardized its reputation by threatening the judge with dismissal (para. 81; para. 85; paras. 87–88).

(3) The appellant did have standing to question the judge”s independence as the dispute was, in reality, between the appellant and the shareholders of the company (as represented by the liquidators). As the company was solvent, the appellant”s demand for payment of his proofs of debt did not deprive any creditors of assets, but reduced the amount to be divided amongst the company”s shareholders, including the various Qatari interests, and the appellant and the respondents were therefore directly interested in the litigation. Further, the appellant had standing to challenge the winding up of the company as in reality the liquidation arose as a result of disagreements between him and the shareholders, and there was a possibility that substantive claims would be brought against him in the future regarding his management of the company. In addition, as the appellant”s challenge was based on the court”s lack of independence and impartiality, it would be unjust not to consider the appeal on the basis that the liquidators were appointed and supervised by the court, and thus in theory independent of the shareholders. The appellant was, therefore, directly interested in the winding-up proceedings and the rejection of his proofs of debt (para. 14; para. 79).

(4) Time would be extended in order to allow the appellant”s application, and leave to appeal would be granted as (a) the delay had been caused by the judge”s failure to disclose his appointment in Qatar; and (b) the appeal raised an issue of great importance, i.e. the independence and impartiality of the court. As full submissions had been made during the application for leave to appeal, the court would...