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Foreign Director Can’t Escape English Jurisdiction

In a ruling which powerfully confirmed the extra-territorial reach of the English courts, the Court of Appeal opened the way for civil contempt proceedings to be brought against the managing director of two overseas companies (the companies) although he was both a foreign national and lived abroad.

The companies, both based in the middle-east, were engaged in a dispute with an English firm (the firm) against which they had obtained a without-notice injunction. The order was granted on the companies’ undertakings that they would preserve two computer hard drives and deliver them up to their solicitors in London.

The injunction was subsequently discharged after a judge found that the companies had failed to comply with those undertakings and had breached their duty to make full and frank disclosure. In those circumstances, the firm was granted leave to issue committal proceedings against the companies and their managing director.

Whilst not disputing that he was the corporate officer responsible for the breaches of the undertakings, the managing director challenged that decision on the basis that he was a foreign national and resided outside the jurisdiction.

In dismissing his appeal, however, the Court rejected arguments that the judge had failed to recognise the strength of the presumption against extra-territoriality and had misapplied the relevant civil procedure rule. The Court was also not swayed by arguments that it would be impracticable to enforce any committal order against a foreign director living outside the jurisdiction.

Given the international character of much of the commercial litigation taking place in England and Wales, the restrictive approach to jurisdiction posited by the managing director would have an anomalous impact that would create procedural problems that were not merely theoretical or marginal.

Al Shalash v Kroll Associates UK Limited. Case Number: A3/2014/0459