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.