Court declines ‘international policeman’ role

Posted: 14th November 2013

RCJIn a case which tested the limits of the High Court’s power to act as an ‘international policeman’, the Court has declined to make an asset freezing order in respect of a $60 million commercial dispute which had no sufficient connection to England and Wales.

Company A had agreed to fund and direct a $50 million drilling operation in China on behalf of company B, which had production sharing contracts with a Chinese state-owned company. Company A had advanced most of that sum before it purported to terminate the agreement. The dispute was referred to arbitration in Singapore and company A was awarded $42.6 million against company B and $20 million against the latter’s parent company (company C) which had guaranteed the deal.

In seeking to enforce those awards, company A had, without notice, persuaded the Court to issue a worldwide freezing injunction against companies B and C on an emergency basis. In challenging that order, companies B and C argued, amongst other things, that the Court had no jurisdiction to make it.

Lifting the order, the Court noted that neither company B nor company C was domiciled in England and Wales and there was evidence that neither of them had any assets within the jurisdiction. Notwithstanding that company C was listed on AIM in London, all the assets concerned in the dispute were foreign.

Observing that the courts of Singapore had equivalent powers to grant the relief sought, the Court noted that the exercise of an overlapping jurisdiction could produce ‘disharmony or confusion’.

The Court concluded, “The circumstances point firmly away from the grant of worldwide freezing order relief. There is no sufficient connection between an order freezing foreign assets and the territorial jurisdiction of this Court…nor is it a case where the English court would be the appropriate international policeman."