Iranian Offshore Engineering And Construction Company v Dean Investment Holdings SA & Ors, Court of Appeal - Commercial Court, October 22, 2018, [2018] EWHC 2759 (Comm)

Resolution Date:October 22, 2018
Issuing Organization:Commercial Court
Actores:Iranian Offshore Engineering And Construction Company v Dean Investment Holdings SA & Ors
 
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Neutral Citation Number: [2018] EWHC 2759 (Comm)

Case No: CL-2016-000153

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Rolls Building, Fetter Lane, London EC4A 1NL

Date: 22 October 2018

Before :

MR JUSTICE ANDREW BAKER

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Between :

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Graham Dunning QC, Jern-Fei Ng QC and Adam Woolnough (instructed by Eversheds Sutherland LLP for the Claimant

Clara Johnson (instructed directly) for the Fifth & Sixth Defendants

(Sepanta International FZE and Reza Mostafavi Tabatabaei)

The other Defendants did not appear and were not represented

Hearing date: 15 October 2018

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Mr Justice Andrew Baker :

  1. The trial of this action is listed for three Commercial Court weeks (12 days) commencing on 3 December 2018, with two days of pre-reading for the trial judge in the previous week. This judgment sets out my reasons for a ruling given at a pre-trial review hearing on 15 October 2018 concerning the import for the trial of the well-known rule, sometimes referred to as a `presumption' or `evidential assumption' of English law, stated, for example, as Rule 25(2) in Dicey, Morris & Collins, ``The Conflict of Laws'' (15th Ed.) and to which I shall therefore refer, for convenience, as `Rule 25(2)'.

  2. Dicey Rule 25 is in the following, familiar terms:

    (1) In any case to which foreign law applies, that law must be pleaded and proved as a fact to the satisfaction of the judge by expert evidence or sometimes by certain other means.

    (2) In the absence of satisfactory evidence of foreign law, the court will apply English law to such a case.

    The footnote to Rule 25(2) reads as follows: ``This Rule was explicitly approved in Bumper Development Corp. v Commissioner of Police of the Metropolis [1991] 1 W.L.R. 1362, 1369 (CA). However, for qualifications to the absolute form of the Rule, see further below, para.9-026.''

  3. Dicey para.9-025 states correctly that the burden of proving foreign law lies on the party who bases a claim or defence upon it and expresses the view that ``... it is better to abandon the terminology of presumption, and simply to say that where foreign law is not proved, the court applies English law.'' A little care therefore must be taken when reading Dicey Rule 25(1), lest it be thought to suggest that whenever a claim is governed by foreign law, it is necessary for the claimant to plead and prove the material content of that law (or indeed, as a logically prior matter, to plead a case as to governing law at all). I am quite clear that is not the law.

  4. The explanation of Rule 25(2) as simply a default rule, that where foreign law is not proved the court applies English law, is then the immediate context for the opening statement in para.9-026 that, ``Even so, there will still be cases in which the application of English law ... will be just too strained or artificial to be appropriate.'' A discussion follows of some examples taken from decided cases, the views being expressed that they ``do not yet offer precise guidance as to when this point will be reached'' (para.9-026) and that ``... there are cases in which the default application of a rule of English law is simply too problematic to be appropriate, but that apart from the fact that the court should not `invent' a rule of English law to be applied in default of proof of foreign law, no sharp line exists to define the limits of the principal that in default of sufficient proof, foreign law will be taken to be the same as English law'' (para.9-029).

  5. The discussion of Rule 25 concludes at para.9-030 with a suggestion that ``in cases where it would be wholly artificial to apply rules of English law to a claim governed by foreign law, a court may simply regard a party who has pleaded but failed to prove foreign law as having failed to establish his case without regard to the corresponding principle of English domestic law.''

  6. The question that arose at the pre-trial review in this case was whether, on the statements of case and given the case management history in the proceedings, it was open to the fifth and sixth defendants to contend at trial that English law should not be applied by default under Rule 25(2). The purpose of the contention would be to defeat the claimant's claims against the fifth and sixth defendants. The argument, that is to say the proposed defence to the claims, would be that:

    i) by English conflict of laws rules (viz. under the Rome II Regulation), the claimant's claims are governed by Iranian law;

    ii) it is inappropriate to apply English law by default under Rule 25(2);

    iii) it is therefore for the claimant to (plead and) prove the principles of Iranian law that govern its claims;

    iv) the claimant has not sought to do that, so its claims fail.

  7. If that argument were available to the fifth and sixth defendants at trial, it would or might equally apply to others of the defendants (most of whom, or possibly all of whom, it is anticipated, will neither appear nor be represented at trial). The claimant's application, seeking essentially a ruling as to where it stands in respect of the availability of that argument, therefore extended to all defendants.

  8. The argument arises in that stark form, extending the suggestion in Dicey para.9-030 from a case of pleading but failing to prove foreign law to a case of failing for not pleading foreign law, because:

    i) the claimant's claims arise out of what it says was a fraud under which payments were made totalling US$87 million, supposedly for the purchase of a mobile offshore drilling rig;

    ii) the claims pleaded against the fifth and sixth defendants allege that they (a) knowingly received sums that were caused by the seventh and eighth defendants to be paid away, in breach of fiduciary duties owed by those defendants to the claimant, (b) dishonestly assisted in breaches by the seventh and eighth defendants of fiduciary duties owed by them to the claimant, by causing, directing, procuring or participating in the division of the proceeds of the fraud, and/or (c)...

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