Riad Tawfiq Al Sadik v Investcorp Bank B.S.C.
| Jurisdiction | Cayman Islands |
| Judge | Kawaley |
| Judgment Date | 06 August 2019 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 47 OF 2009 (IKJ) |
The Hon. Justice Kawaley
CAUSE NO. FSD 47 OF 2009 (IKJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Costs of successful application for anti-suit injunction-indemnity costs-GCR Order 62 rule 4(11)-application for interim payment-Grant Court Rules Order 62 rule 4(7) (h)-award of damages reflecting costs of foreign proceedings-governing principles
Ms Shelley White, Ms Sarah Gavin and Mr Jonathan Turner of Walkers, on behalf of the 1 st Defendant (“Investcorp Bank”)
Mr Tom Lowe QC of counsel and Ms Anya Park of Harney, Westwood & Riegels, on behalf of the Plaintiff
By a judgment and Order dated May 18, 2012, this Court (Jones J) dismissed the Plaintiff's claims herein. On May 30, 2012, the Plaintiff appealed against this judgment to the Cayman Islands Court of Appeal. The Court of Appeal dismissed the appeal on September 21, 2016. The Plaintiff's further appeal to the Judicial Committee of the Privy Council was heard on April 30 and May 1, 2018. On May 28, 2018, the Plaintiff commenced proceedings in the Dubai Court of First Instance (the “Dubai Proceedings”). The Dubai Proceedings asserted claims in respect of substantially the same dispute which was before the Privy Council. On June 18, 2018 (in Al Sadik v Investcorp Bank and others [ 2018 (1) CILR 606]; [2018] UKPC 15), the Privy Council delivered its advice that the Plaintiff's appeal should be dismissed. By Order dated June 27, 2018, the Plaintiff's final appeal was dismissed.
By a Summons dated August 31, 2018 (the “Anti-suit Injunction Summons”), the 1 st Defendant applied for an anti-suit injunction to restrain the Plaintiff from pursuing the Dubai Proceedings and for other ancillary relief. On November 13, 2018, I granted the 1 st Defendant an anti-suit injunction and declaratory relief in respect of the Plaintiff's commencement and continuance of the Dubai Proceedings: Al Sadik v Investcorp Bank B.S.C and others, FSD 42 of 2009 (IKJ), Judgment dated November 13, 2018 (unreported) (the “Judgment”). The primary finding was that the Dubai Proceedings had been brought in breach of an exclusive jurisdiction clause in a contract between the parties. Alternatively, I found that re-litigating the same issue which had been determined against the Plaintiff in the present action was an abuse of process.
By a Summons dated May 15, 2019 (the “Costs Summons”), the 1 st Defendant applied for Orders that:
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(1) the Plaintiff pay the costs of the Anti-suit Injunction Summons on an indemnity basis;
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(2) interest at the rate of 2.375% be paid by the Plaintiff on the said costs;
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(3) the Plaintiff pay an interim payment of 70% of the 1 st Defendant's costs, or such other sum as the Court deemed just, pursuant to GCR Order 62 rule 4 (7) (h), within 14 days;
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(4) the Plaintiff pay as damages on an indemnity basis with interest the 1 st Defendant's costs in relation to the Dubai Proceedings.
The 1 st Defendant's Costs Summons was heard on July 11, 2019. At the end of the hearing, I granted the following relief:
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(1) I awarded the 1 st Defendant its costs of the Anti-suit Injunction Summons on the indemnity basis;
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(2) I awarded the 1 st Defendant interest on its said costs at the rate of 2.375% from the date of the Judgment until payment;
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(3) I ordered the Plaintiff to pay an interim payment of 40% of the 1 st Defendant's estimate of its recoverable indemnity costs;
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(4) I awarded the 1 st Defendant damages measured by the costs of the Dubai Proceedings, with interest at the same rate from the date the Dubai Proceedings were commenced until payment.
These are the reasons for that decision. Investcorp Bank's counsel indicated that guidance would be welcome in particular in relation to the jurisdiction to order an interim payment on account of costs. The latter jurisdiction arises from the 2016 vintage GCR Order 62 rule 4(7) (h).
It was common ground that the relevant rule was GCR Order 62 rule 4(11) which provides as follows:
“(11) The Court may make an inter partes order for costs to be taxed on the indemnity basis only if it is satisfied that the paying party has conducted the proceedings, or that part of the proceedings to which the order relates, improperly, unreasonably or negligently.”
The crucial findings in the Judgment were summarized as follows:
“98. The application for an anti-suit injunction is granted in favour of Investcorp either (a) on a contractual basis by way of enforcement of the EJC in the SPA, or (b) on the grounds that it is an abuse of the processes of this Court for the Plaintiff to seek to re-litigate abroad an issue which could and should have been advanced in the present proceedings which he initiated in this forum but lost.”
The 1 st Defendant submitted that in these circumstances the starting point must be that as costs claimant it was entitled to an award on the indemnity basis: Kyrgz Mobile Tel Limited & Ors. v Fellowes International Holdings Limited & Anor. [2005] EWHC 1329 at paragraph 43 (Cooke J). However, Ms White relied most heavily on two local cases which suggested that indemnity costs will ordinarily be awarded where it is established that proceedings have been improperly brought abroad.
Firstly, in Re Ardent Harmony Fund Inc (in Official Liquidation), FSD 54 of 2016 (ASCJ), judgment dated May 31, 2016 (unreported) which concerned improperly bringing foreign proceedings against a company in liquidation here, Smellie CJ held as follows:
“50. In light of ITTO's unilateral decision to issue the Barbados Proceedings without serving notice upon the JOLs, the lack of any apparent proper basis for doing so, and its refusal to dismiss or withdraw the Barbados Petition once the lack of utility of the Barbados Proceedings was brought to its attention and as was further explained in the referenced telephone conversations, the JOLs' costs of having to respond to the Barbados Proceedings, on the indemnity basis forthwith. It is submitted that an indemnity costs order is justified because ITO's conduct is ‘improper’ and ‘unreasonable’, within the meaning of the Grand Court Rules, Order 62, rule 4 (11) and because in the absence of an indemnity costs order, the other creditors of the Fund will bear the costs of ITTO's actions.”
This case was clearly analogous to the present case to a material extent. Proceedings were improperly brought abroad and the costs consequences of the affected party being compelled to respond were held to create an entitlement to an award of indemnity costs. The misconduct here was more egregious because (a) there was an exclusive jurisdiction clause, and (b) the Dubai Proceedings were commenced just as the highest appellate Court in the agreed forum was finally determining the merits of the Plaintiffs claim.
More analogous still was Re BDO [ 2018 (1) CILR 187]. In this case Parker J granted an anti-suit injunction to restrain the pursuit of New York proceedings in breach of an arbitration clause. Dealing with the issue of the basis of taxation of costs, he held:
“9 I have been referred to no Cayman authority on the question of what an appropriate costs order should be in circumstances similar to this case. There are authorities on the point in England. The English courts have held that the general costs order in relation to a party which commenced proceedings in a non-chosen jurisdiction in breach of an arbitration or exclusive jurisdiction clause is one which indemnifies the party compelled to enforce the contractual bargain in both the foreign proceedings and anti-suit injunction proceedings (as a form of damages)—see Kyrgyz Mobil Tel Ltd. v. Fellowes Intl. Holdings Ltd. (5) and ( A v. B (1) [2007] EWHC 54 (Comm), at paras. 8–15).
10 In Kyrgyz, Cooke, J. said ( [2005] EWHC 1329 (QB), at para. 42):
‘… [T]he correct approach where there has been a breach of a jurisdiction clause by a party in initiating proceedings in a non-chosen jurisdiction is that the costs should be awarded on an indemnity basis. The reason for that is plain. If a party has breached his agreement, then the damages which flow from the breach of that agreement are all the costs incurred by the party who successfully relies upon the choice of jurisdiction clause. In my experience, the Commercial Court in particular, but courts generally in this country adopt such an approach.’
11 In A v. B, Colman, J. set out ( [2007] EWHC 54 (Comm), at paras. 9–15), with similar reasoning, the fundamental injustice of a situation if a costs order was confined to costs on the standard basis, where an indemnified portion of costs would be a loss to the successful party that could only be recovered in proceedings for breach. To be placed in a position where the balance of the recoverable amount could not be quantified until after the costs had been formally assessed would involve delay in obtaining compensation properly due (and more costs and court time) and so the learned judge concluded that where there was a successful application for an anti-suit injunction as a remedy for breach of an arbitration or jurisdiction clause and that breach has caused the innocent party reasonably to incur legal costs, those costs should normally be recoverable on an indemnity basis.
12 These decisions, although not binding upon this court, are to my mind, especially in the absence of Cayman authority, persuasive in their reasoning and make for good policy. BDO Cayman has also referred me to an Australian authority ( Pipeline Services WA Pty. Ltd. v. ATCO Gas Australia...
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