English High Court may compel foreign defendants to disclose their assets worldwide in aid of execution of international arbitration awards

In “Cruz City 1 Mauritius Holdings v Unitech Limited, Burley Holdings Limited and Arsanovia Limited” of 23 May 2013, the High Court of Justice Queen’s Bench Division ruled that it has jurisdiction to compel foreign defendants to provide disclosure of all their assets worldwide in aid of execution of a Partial and a Final Award made in London under the aegis of the LCIA.

The dispute arose from a joint venture agreement between the claimant and the defendants, an Indian property developer and its affiliates (Unitech Limited, Burley Holdings Limited and Arsanovia Limited) for the commercial development, management and operation of certain land in Mumbai (India).

After the three defendants failed to satisfy two awards rendered against them, the claimant sought an order before the High Court to compel the defendants to provide disclosure verified by an affidavit of a proper officer of all their assets worldwide, under Section 37(1) of the Senior Courts Act 1981.

The defendants argued that the English Court had no jurisdiction to compel a foreign defendant to disclose its assets worldwide to aid the execution of an arbitral award because such disclosures are usually only granted (i) as accessories to freezing orders or “Mareva injunctions”, which is not the case in the present dispute, and (ii) for assets located in England.

The High Court upheld its jurisdiction to make such an order, finding that “it is the policy of these courts to prevent a defendant from removing its assets from the jurisdiction or concealing them within it, so as to deny a successful plaintiff the fruits of his judgment”, especially since by agreeing to arbitrate at an English seat, the foreign defendant was a party to a procedure supervised by the High Court and subject to its jurisdiction.

Enforcement of an award may be problematic when the losing party refuses to pay and the location of its assets is unknown. By giving parties to procedures seated in London the possibility to obtain a worldwide asset disclosure order against the losing party, the High Court enhances the winning party’s chances to have the award enforced.

The decision is available here.

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