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Charles Samek QC succeeds in obtaining order for cross-examination on asset disclosure under worldwide freezing order

In Louis Dreyfus
Commodities Mea Trading Dmcc v Concorde Pour L’industrie Et L’exploitation SPRL
& ORS Charles Samek QC acted for the claimant on its successful
application that a foreign company director attend for cross-examination in
relation to alleged deficient disclosure of personal and corporate assets
pursuant to a worldwide freezing order. The claimant obtained worldwide freezing order relief (WFO)
and anti-suit injunctions against the defendants. The anti-suit relief had been
granted to restrain the defendants’ prosecution of proceedings in the
Democratic Republic of Congo (DRC) in breach of English court exclusive
jurisdiction clauses in various commercial agreements for the development and
exploitation of mines in DRC. The claimants had argued that the prosecution of
the DRC proceedings was intended to attack security in DRC for monies which the
claimant had lent the first – third corporate defendants. The fourth defendant
was the director and ultimate sole or majority owner of the corporate
defendants. The claimants contended that the defendants had failed to give
proper asset disclosure as required by the WFO and following unsatisfactory
responses to correspondence applied to cross-examine the fourth defendant on
the defendants’ asset disclosure. The defendants resisted the application
arguing that it was disproportionate, oppressive and that in any case the
claimants were sufficiently protected by the security which they had in DRC.Phillips J rejected the defendants’ arguments and granted
the claimants’ application. The judge also ordered that the defendants give
disclosure in relation to specific bank accounts and awarded the claimants
their costs. In making the cross-examination order, Phillips J followed the
approach of Vos J in the leading case of Jenington International Inc v
Assaubayev [2010] EWHC 2351 as followed by Field J in Otkritie
International Investment Management Ltd v Urumov [2012] EWHC 3106 (Comm).
Those requirements were: 

• the statutory discretion to order cross-examination is broad and
  unfettered. It may be ordered whenever the court considers it just and
  convenient to do so
• generally cross-examination in aid of an asset disclosure order will be
  very much the exception rather than the rule
• it will normally only be ordered where it is likely to further the
  proper purpose of the order by, for example, revealing further assets that
  might otherwise be dissipated so as to prevent an eventual judgment again the
  defendants going unsatisfied
• it must be proportionate and just in the sense that it must not be
  undertaken oppressively or for an ulterior purpose. Thus it will not normally
  be ordered unless there are significant or serious deficiencies in the existing
  disclosure
• cross-examination can in an appropriate case be ordered when assets have
  already been disclosed in excess of the value of the claim against the
  defendants.

Phillips J held that the essential issue was whether it was
it was proper to order cross-examination where the claimants’ principal source
of recovery was likely to be the DRC security. However, the manner in which the
fourth defendant had addressed the various issues gave rise to considerable
concern in relation to the veracity of his initial asset-disclosure evidence.
That evidence had been deficient. Moreover, the claimants’ reasonable requests
for information had not been met by appropriate answers; the last witness
statement which the fourth defendant had made was in truth as an attempt to
frustrate the disclosure application rather than provide proper and sensible
evidence of assets. In addition, the defendants had produced a bank statement
from an account in Beirut which suggested that there could be other undisclosed
assets, and as to which the fourth defendant had been at best coy. It was
appropriate in the circumstances to order that the fourth defendant attend for
cross-examination.The case is significant as it confirms that
cross-examination on asset disclosure may be ordered even where the value of
the assets disclosed exceeds the sum frozen and even where, on the face of it,
the claimant has security. However, so far as security is concerned, the
important point is that the WFO had taken account of the fact that that the
security in question was under attack and for the purpose of setting a maximum
sum under the WFO had effectively discounted it. The defendants had not applied
to vary the WFO by seeking to reduce the maximum sum.