ADM International SARL v Grain House International SA & Anor
[2024] EWCA Civ 33
ADM International SARL v Grain House International SA
26 January 2023
[2023] EWHC 135 (Comm)
High Court
A company and its director repeatedly ignored court orders to pay a debt and provide financial information. The judge was angry and sent the director to jail for a year, fined the company, and made them pay legal costs. A request to stop them from taking further action in another country was denied because they hadn't actually started anything yet.
Key Facts
- •ADM International SARL (ADM), a Swiss company, sought to commit Grain House International S.A. (GHI), a Moroccan company, and its directors for contempt of court.
- •The contempt allegations stemmed from GHI's failure to comply with various court orders, including an asset disclosure order (ADO), a worldwide freezing order (WFO), and a further disclosure order (FDO), all related to an unpaid GAFTA arbitration award of over US$3.4 million.
- •GHI repeatedly failed to provide complete and unredacted financial information, despite numerous court orders and extensions.
- •GHI also allegedly continued trading in breach of the WFO.
- •The Second Defendant, Elhachmi Boutgueray, was a director of GHI and actively involved in the non-compliance.
Legal Principles
All allegations of contempt must be proved to the criminal standard, beyond reasonable doubt.
Sarayiah v Williams [2018] EWHC 342 (QB)
To establish contempt, it must be shown that the contemnor knew the order's terms, breached it, and knew the facts constituting the breach (knowledge of the breach itself is not necessary).
Varma v Atkinson [2020] EWCA Civ 1602
The court must approach contempt applications cautiously, ensuring the breach is clear and not based on ambiguous interpretations of orders.
Re Clements (1877) 46 L.J. Ch. 375; Redwing Ltd v Redwing Forest Products Ltd [1947] 64 RPC 67
Factors suggesting contempt proceedings are unnecessary include compliance or steps to regularise the breach. The seriousness of the breach (deliberation or involuntariness) is key.
Absolute Living Developments Ltd v DS7 Ltd [2018] EWHC 1717 (Ch)
In the context of asset disclosure orders, 'value' generally means 'unencumbered value'.
Aspinall v Lim [2019] EWHC 2379 (QB); PJSC Commercial Bank Privatbank v Kolomoisky [2018] EWHC 482 (Ch)
Breaches of freezing orders and related disclosure orders are taken very seriously, often resulting in custodial sentences.
JSC BTA Bank v Solodchenko (No 2) [2012] 1 WLR 350
The court can retrospectively dispense with personal service of an order if there is good reason.
BMBF 4 PLC v Rizwan Hussain [2022] EWCA Civ 1264; MBR Acres Ltd v Maher [2022] 3 WLR 999
Outcomes
The court found GHI and the Second Defendant in contempt of court for multiple breaches of the ADO, FDO, and WFO.
The court found that the breaches were deliberate and not merely technical, citing the repeated failure to provide complete and unredacted financial information, the continued trading despite the WFO, and the implausible explanations offered by GHI.
The Second Defendant (Elhachmi Boutgueray) was sentenced to 12 months imprisonment (Ground 3) and a concurrent 6 months for Ground 4.
The court considered the seriousness of the breaches, the lack of full remediation, and the previous history of non-compliance. While acknowledging some mitigating factors such as belated attempts at compliance and an apology, the court deemed a custodial sentence appropriate.
GHI was fined £75,000 and ordered to pay costs.
The court's power to impose meaningful sanctions against GHI was limited given its location in Morocco.
The application for an anti-suit injunction was refused.
The court found insufficient evidence of a threatened breach of the governing law and jurisdiction clause in the contract, as no foreign proceedings had been commenced.