Court of Appeal confirms that the English courts have jurisdiction to commit a foreign director of a foreign company for contempt
The first instance decision in this case was reported in Weekly Update 01/14. The claimant foreign company was in contempt of court for breaches of court orders and Smith J held that the claimant’s managing director (who is domiciled and resident in Saudi Arabia) could be served with committal proceedings because the English court had jurisdiction under CPR r81.4 to make a committal order against the director. The director appealed against that decision.
The Court of Appeal has now unanimously dismissed that appeal. Although CPR r81.4 (which provides that a committal order can be made against the director of a company which is in breach of a judgment, order or undertaking) does not expressly have extra-territorial effect, the Court of Appeal held that the legislative intention behind the rule was that it should have such an effect. That was because, absent such a power, the English courts would have “significantly weakened” powers to deal with contempt of its orders by companies with foreign directors. In reaching this conclusion, Beatson LJ noted that following the introduction of the CPR, “the general position is that reference to authorities under the former rules is generally no longer relevant and the courts generally refuse to look at equivalent provisions in the RSC as an aid to interpretation”.
The Court of Appeal also drew a distinction between this case and Masri v Consolidated Contractors (see Weekly Update 30/09), where the House of Lords held that the English courts did not have jurisdiction to order the examination of a foreign director of a debtor company under CPR r71: “In my judgment, the nature of committal proceedings is very different from the nature of the power of the court under Part 71 to obtain information from judgment debtors” (as per Beatson LJ).
Furthermore, the judge had been correct to exercise his discretion to give permission for service out. That was because the notice of the committal application did fall within the meaning of a “claim form” under CPR r6 as it commenced “proceedings”, which in turn included committal proceedings.
The Court of Appeal also referred to Article 22(5) of Regulation 44/2001 which provides that, in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced shall have exclusive jurisdiction, “regardless of domicile”. At first instance, the judge held that this Article did not apply because the director was not domiciled in an EU Member State. In reaching that conclusion, the judge said that he was bound by the Court of Appeal’s decision in Choudhary & Ors v Bhatter & Ors (see Weekly Update 44/09). Although not required to decide the point, the Court of Appeal nevertheless expressed the view that, in light of ECJ caselaw, there was a “compelling” argument that Choudhary was incorrectly decided and that the English courts did have jurisdiction under the Article, no matter where the defendant is domiciled.