Case number and/or case name
Banco Nacional de Comercio Exterior SNC v Empresa Telecomunicationes de Cuba SA [2007] EWHC 19 (Comm)
Summary
The dispute arose because, due to a decree made by the Government of Cuba, Empresa Telecomunicationes de Cuba SA (ETC) was not able to perform its obligations to Banco Nacional de Comercio Exterior SNC from Mexico. The applicant was Banco Nacional. The respondent was Empresa Telecomunicationes de Cuba SA (ETC) value of the claims was significant as there was an Italian judgment which ordered for ETC to pay over 1. The complexities were due to the fact that there were series of agreements between the parties. There was an Escrow Agreement, containing Italian jurisdiction and choice of law agreements. There were two loan agreements, containing arbitration clauses. As a result, there were Paris arbitration proceedings, and Italian court proceedings between the litigants. Although the agreements were different, both adjudicators had to address the question whether the decree of the Government of Cuba was a force majeure. The difficulties were exacerbated by the fact that the ICC arbitration award was set aside by the French courts. Nonetheless, the Italian court rendered its judgment in November 2005.
On 29 September 2006, the judgment creditor, Banco Nacional, applied to register the Italian judgment in England. Both applications were granted. On 26 October 2006, a worldwide freezing order was sought. On 24th January 2007, the English High Court granted the application for the world wide freezing order. Mr Justice David Steel held:
“29 […] Article 47 provides an unrestricted and discrete code for the granting of provisional or protective measures in the context of enforcement. I detect no basis for restricting the measures to the freezing of domestic assets and/or for limiting the disclosure to domestic assets.
30 The limitations on such measures in Article 31, exemplified by the Van Uden case, afford no analogy with the situation post-judgment as the recitals to the regulation demonstrate. This is all the more so where, as here, the court exercising substantive jurisdiction had no power to grant.” [29-30]
On 24th July 2007, the English Court of Appeal discharged the worldwide freezing order because the English court had no jurisdiction under Article 47 to make such an order. In this context, Lord Justice Tuckey held:
“25 All parts of article 47 are directed at enforcement. Article 47(1) is simply dealing with the position before a declaration of enforceability/registration has taken place. […] Each of the provisions of article 47 deals with the time at which things can or cannot be done. Thus article 47(1) deals with the time before registration; (2) with the time after registration; and (3) with the time after registration where there is an appeal pending.
[…]
29 Applying these principles to the facts of this case we think there can be no doubt that it would be inexpedient to grant BNC a worldwide freezing order. ETC is not resident here. Any assets here are protected by the domestic order. The worldwide order is only directed at assets outside the jurisdiction. There is therefore no connecting link at all between the subject matter of the measure sought and the territorial jurisdiction of this court. It is not suggested that the worldwide order should be made in order to assist the Italian court or any of the other courts of the member states which have been involved in enforcement proceedings.” (See [2007] EWCA Civ 662 [25-29])
Also, an appeal was made before the English High Court against the order registering the judgment. (See [2007] EWHC 2322 (Comm).) The judgment debtor, ETC, invoked the public policy defence. The English court dismissed the appeal. On 11th October 2007, Mr Justice Tomlinson held that the argument that recognition was contrary to public policy would require a review of the merits which must be done by the courts in Italy (i.e. the court of origin).