Dreymoor Fertilisers Overseas Pte Ltd v (1) Eurochem Trading GMBH (2) JSC MCC Eurochem (2018)


An application to continue an injunction preventing the enforcement of a US court order requiring a company director to disclose documents and provide deposition evidence was refused in circumstances where the court did not have a legitimate interest in policing an attempt to obtain documents for use in foreign proceedings, let alone in reviewing a decision of the US court.


The claimant company sought the continuation of an injunction to restrain the defendants from enforcing a US court order requiring its former director (C) to disclose documents and provide deposition evidence.

The claimant was an international trading company and the defendants were sister companies which had sold fertiliser products to the claimant. They had entered into several hundred contracts, all of which contained UK arbitration clauses. The defendants claimed that the contracts had been vitiated by bribes paid by the claimant to its former employees and brought proceedings in the British Virgin Islands and Cyprus. The order had been made pursuant to United States Code s.1782 which authorised the relevant district court to order that a person should provide testimony and documents for use in international tribunals. However, the defendants intended also to use whatever information was obtained in arbitrations between the parties in the UK. The claimant obtained an interim injunction against the implementation of the order and sought to continue that injunction until after the completion of disclosure in the arbitrations so far as production of documents was concerned and until after the conclusion of the evidentiary hearing in the arbitrations so far as the deposition was concerned. It argued that it would produce as part of its disclosure in the arbitrations any material documents in C's possession, thereby rendering the order for disclosure by C unnecessary, and that it expected to be able to produce a witness statement from C and to make him available for cross-examination at the hearing, rendering his deposition unnecessary. It accepted that the defendants might seek disclosure of documents from C or depose him in the future, but only at a time when that would not affect its preparation in the arbitrations and when it would be too late for the defendants to use the fruits of the s.1782 order in the arbitrations.


Unconscionability and s.1782 applications - The factors in play were materially different to those relied on in Omega Group Holdings Ltd v Kozeny [2001] 9 WLUK 45 and Benfield Holdings Ltd v Elliott Richardson [2007] EWHC 171 (QB), Omega and Benfield considered. The s.1782 order had been expressly made to obtain documents and evidence for use in foreign proceedings. The instant court would have a legitimate interest in granting an injunction to protect the integrity of its own proceedings and of arbitration proceedings over which it had a supervisory jurisdiction but it did not have one in policing an attempt to obtain documents for use in foreign proceedings, let alone in reviewing a decision of the US court. In none of the cases referred to had the US court decided that the documents and evidence were needed for proceedings in the third country, that the claimant for an order under s.1782 had already been prejudiced in those proceedings by the absence of the material, or that it would suffer further prejudice if the material was not made available. In the instant case such a decision had indeed been reached and reaffirmed after exhaustive argument in which the claimant, via C, had participated fully. It would be a serious breach of comity to say that the US court's conclusions were wrong and that, as a result, an injunction should be granted to prevent enforcement of an order for the production of documents and evidence for use in proceedings in the third country against an individual subject to its jurisdiction. In any event, the court was not persuaded that the US court's conclusions were wrong. The defendants had a legitimate interest in obtaining documents for use in its foreign proceedings and it would be a strong step to prevent them from doing so. The claimant had been successful in delaying the final determination of the s.1782 application for over a year, but having done so could hardly complain that its enforcement would now come at an inconvenient time. The application had been made at a very late stage and if it had been an application under the Arbitration Act 1996 s.44 it would have been bound to fail. That fact was a powerful factor against the grant of an injunction. It could not be said that the UK arbitrations were the lead proceedings and it was clear that the documents to be provided under the order were potentially wider than the claimant was prepared to provide so that it was not the case that enforcement of the order would provide them with nothing in the way of documents that they would not get in the arbitration. Although the defendants would get the chance to cross-examine C at the arbitration hearing if he gave evidence, that would not take place for another seven months and they would need to apply for permission to use that evidence in other proceedings. That contrasted with the position in Benfield where evidence was to be given in public court proceedings by compellable witnesses within a few weeks. There was a risk that if C was deposed in the US and found the experience uncomfortable he might be discouraged from giving evidence in the arbitrations. Whether enforcement of the order would constitute unconscionable conduct required an overall evaluation. Looking at the circumstances of the case as a whole, it would not (see paras 70-83 of judgment).

Breach of contract - As it would not be unconscionable to enforce the order, the claim based on a breach of a contractual right, namely that the claimant's dispute with the defendants should be dealt with by the agreed arbitral process and in no other way, could not succeed either (paras 84-85).

Application refused