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International Arbitration: Court of Appeal clarifies enforcement procedures: ADM International v Grain House International and Anor [2024] EWCA Civ 33

Posted: 06/02/2024

This landmark Court of Appeal decision was an appeal from Cockerill J’s well-publicised Commercial Court Judgment in ADM International v Grain House International [2023] EWHC (Com) 136, where the Court found the Defendant and its CEO in contempt of Court in relation to breaches of asset disclosure and asset freezing orders made in aid of enforcement of a multi-million dollar GAFTA arbitration Award relating to cereal trading in Morocco.  The principal complaint against the Defendants, which earned the CEO a sentence of one year’s imprisonment, was that in the face of an order requiring the company to disclose all property assets of above 50,000 US $ in value, the information provided by the company referred to the gross value of such properties, and failed to reveal that most of the properties were heavily encumbered by charges in favour of the company’s banks, and hence had little or no equitable value available to satisfy the GAFTA Award.

On appeal, the Court of Appeal quashed the Defendants’ convictions for contempt on this ground, holding that the word “value” in the standard form of asset disclosure orders relating to property, refers to the gross value of such property, before taking account of any encumbrances.  This important decision runs contrary to what for many years most practitioners have understood to be the position, and will certainly necessitate a rethink about the drafting of such orders in future.

The Court of Appeal also clarified the basis upon which the directors of companies held to be in breach of Court orders, can be held in contempt of Court, notwithstanding that such directors have not themselves been a party to the order breached.  This kind of director’s liability formerly appeared to be the creature of CPR 81.4(3), which was repealed following the passage of the new contempt of Court rules, found in CPR 81, which contain no equivalent provision.  This left it uncertain whether a director’s potential liability for the contempts of a company controlled by him survived, and if so what the juridical basis for such liability might be.

Following a detailed examination of the historical basis for the Court’s jurisdiction to issue writs of mandamus against the officers and members of a corporate sole, the Court of Appeal has found that what was described as the responsible persons liability principle subsisted independently of any rules of Court governing the application.  Accordingly directors of companies remain potentially liable to conviction for contempts of Court in respect of disobedience to Court orders by the companies they control, albeit such directors are not themselves parties to such orders. The Court of Appeal has certified that this difficult issue raises a point of law of public importance, but nonetheless has refused leave to appeal to the Supreme Court.

A link to the Judgment can be found here: https://www.bailii.org/ew/cases/EWCA/Civ/2024/33.html

Bob Moxon Browne KC and George Hilton acted for the Appellants, instructed by a team at Sterling Stamp lead by Ihsane Eldrissi.

Bob Moxon Browne KC and George Hilton both have busy commercial international arbitration practices. For enquiries please contact the clerks.


Authors

Bob Moxon Browne KC

Call: 1969 Silk: 1990

George Hilton

Call: 2012

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