In Touton Far East Pte Ltd v Shri Lal Mahal Ltd (formerly Shivnath Rai Harnarain (India) Ltd), the High Court of Justice determined that a post-judgment worldwide freezing order related to a GAFTA arbitration award, should continue indefinitely until payment of the judgment or a further order was made.
In February 2016, the High Court of Justice in England issued a freezing order in favour of the claimant, Touton Far East Private Limited against Shivnath Rai Harnarain Limited, an Indian company. The freezing order was made in support of a judgment which had previously been entered in the claimant’s favour, following and giving effect to a GAFTA arbitration award.
The Court subsequently made a further order continuing the freezing order until payment of the judgment debt or further order and instructed that there would be an additional hearing on March 18, 2016, at which time the defendant’s compliance with the freezing order would be considered.
The defendant, although notified of the order, had, up to that point, failed to give any of the disclosure it was required to give regarding its worldwide assets. Additionally, the defendant’s solicitors indicated that they might wish to make an application to vary or discharge the order and the Court gave them opportunity to apply to vary or discharge the order but stipulated that any application must be made in time to be heard at the March 18, 2016 hearing.
Just prior to the March 18, 2016 hearing, the defendant provided a witness statement, purporting to comply with the Court’s order for disclosure.
At the March 18, 2016 hearing, the defendant raised two points of argument regarding the freezing order that had previously been granted.
Firstly, the defendant submitted that it was not appropriate to maintain a freezing order that lasted indefinitely and that an expiration date should be stipulated. In the defendant’s submission, an appropriate period of time would have been one month.
Secondly, the defendant argued that it should have an extension of time to April 1, 2016 from March 18, 2016 to make a formal application to vary or set aside the freezing order.
The Court determined that the freezing order would remain in place until payment of the judgment debt or further order of the Court and refused the defendant’s request for additional time to bring an application to vary or set aside the freezing order.
The Court noted that while pre-judgment freezing orders should normally be of limited duration, this general principle did not apply to judgment debts that were almost six years old.
The Court also specifically took issue with the defendant’s unacceptably sparse attempt to comply with the requirement for disclosure regarding its worldwide assets and, in addressing the issue of whether the claimant had promptly attempted reciprocal enforcement of the judgment, noted that while there had been several unsuccessful attempts to enforce the judgment in a number jurisdictions, no attempt had been made to enforce the judgment in India.
The Court held that this was acceptable, however, as the defendant’s own position, supported by evidence it had produced to date, was that the judgment was unenforceable in India on the ground that it was contrary to public policy.
The Court further noted, disapprovingly, the unfortunate problem with two parties agreeing to be bound by arbitration to settle their disputes and then one party, dissatisfied with the result, relying on domestic law in an effort to not comply with the arbitrator’s decision.
In concluding that the order should remain in place, the Court determined, in particular that:
- it is the policy of English law that English judgments should be paid;
- the defendant was in a position to pay the judgment at any time;
- it was clear that the defendant was a substantial company and was choosing not to pay as opposed to being unable to pay; and
- if it was determined at a later date that the freezing order was being maintained by the claimant for an illegitimate purpose, the Court’s position could be reconsidered at that time.
The decision arguably suggests a continued desire by English courts to attempt to ensure that English judgments (whether court or arbitral) have a reasonable opportunity to be enforced internationally and that a successful arbitration claimant, acting reasonably, must be given fair opportunity to see that its judgment or award is realized, particularly when it is obvious that a defendant is attempting to avoid satisfying the award or judgment despite an ability to do so.
The appeal period for the decision has passed and, to date, there has been no further application or attempt by the defendant to vary or set aside the order.
 Ibid, at para 3.