Court of Appeal holds that it has jurisdiction to commit officer of judgment debtor for failure to provide information under CPR 71

Deutsche Bank AG v Mr Alexander Vik [2018] EWCA Civ 2011

This judgment is the latest instalment in the long-running litigation between Deutsche Bank (“DB”) and the Monaco-based billionaire, Alexander Vik.  

In 2008, Mr Vik’s personal investment vehicle, Sebastian Holdings, Inc. (“SHI”), incurred huge debts to DB after it made a series of heavily loss making FX trades.  Following a ten-week trial, DB obtained judgment against SHI for US$320m in the English Commercial Court.  Subsequent decisions in the Court of Appeal and at first instance have held that Mr Vik has sought to prevent DB obtaining its judgment debt, by stripping SHI of its assets to make it judgment proof.  

In July 2015, DB obtained an order against Mr Vik under CPR Part 71 (the “CPR 71 Order”).  This required him to provide information about the judgment debt and to attend Court in London for cross-examination about the whereabouts of SHI’s assets. DB validly served the CPR 71 Order on Mr Vik within the jurisdiction, whilst he was temporarily in London. 

Following Mr Vik’s cross-examination in December 2015, DB contended that Mr Vik had failed to provide the documentation required by the CPR 71 Order and that he had given false evidence.  DB accordingly sought to commit Mr Vik for breach of the CPR 71 Order, in accordance with the detailed committal regime set out in CPR Part 81.

Mr Vik, however, contended that because he  was domiciled in Monaco, the English Court had no jurisdiction to commit him for contempt of an order made under CPR Part 71.  He argued, therefore, that DB was not entitled to serve any application for committal upon him.

Mr Vik’s arguments were rejected at first instance by Teare J, who held that the Court had jurisdiction to commit Mr Vik and that DB was entitled to serve its application upon him. 

Mr Vik then appealed.  The Court of Appeal, however, unanimously dismissed the appeal and upheld the decision below.

The Court of Appeal’s judgment is a highly important decision in the law of committal and jurisdiction.  Amongst other things, it considers a number of critical substantive and procedural matters relating to the Court’s power to commit a foreign officer of a company, the scope of the Court’s incidental jurisdiction to police its own orders, and the interrelationship between the detailed committal procedure in CPR 81 and the summary committal procedure in CPR 71.8. 

In particular, the Court of Appeal gave guidance about the circumstances in which a judgment creditor should apply for an order for committal under the detailed regime in CPR Part 81, and when it may be appropriate to use the summary committal regime in  CPR 71.8 (see paras. [28]-[47]). It held that in complex cases, the judgment creditor may be required to apply under CPR 81, rather than CPR 71.8. 

Also important is the Court of Appeal’s detailed analysis of its reasons why the jurisdiction to commit Mr Vik for breach of the CPR 71 order was incidental to the jurisdiction to make the CPR 71 Order itself (see paras. [48]-[73]). As the Court held, the power to enforce an order by way of committal is incidental to the power to make the order in the first place.

Additionally, the Court considered the true construction and effect of Art. 24 of the Recast Brussels Regulation.  This permits certain applications to enforce a judgment or order to be served out of the jurisdiction without the Court’s permission.  In particular, the Court of Appeal indicated that it agreed with the Judge below that DB was also entitled to serve the committal application on Mr Vik in Monaco under Article 24, notwithstanding the earlier Court of Appeal decision in Choudhary v Bhattar [2010] 2 All ER 1031 (CA), which held that Article 24’s predecessor, Article 22 of the Brussels Regulation, did not permit service on respondents who were not domiciled in a Member State.  The Court indicated that it agreed with previous obiter Court of Appeal authority (Dar Al Arkan [2015] 1 WLR 135) that Choudhary was wrongly decided. See paras. [76]-[83].

Finally, the Court of Appeal considered the true meaning and effect of Gateway 10 of Practice Direction 6B.  This permits claims “to enforce any judgment or arbitral award” to be served out of the jurisdiction with the Court’s permission (PD6B para. 3.1(10)).  The Court observed that the Rules Committee should consider the drafting of Gateway 10 further, in order to ensure that committal applications may be served on officers out of the jurisdiction (paras. [84]-[89]).  

The Judgment can be found here.

Sonia Tolaney QC, James MacDonald and Andrew Lodder appeared for Deutsche Bank, instructed by Freshfields Bruckhaus Deringer LLP.