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Freshfields Risk & Compliance

| 2 minutes read

Court of Appeal confirms committal jurisdiction after CPR 71 cross-examination

The Court of Appeal has handed down judgment in Alexander Vik and Deutsche Bank AG [2018] EWHC 3265 (Com).  The important principles engaged by this case were laid bare by Gross LJ at the outset. He described it as highlighting the tension between two facets of the Rule of Law: enforcing court orders on the one hand; keeping within the jurisdictional limits of the Court, especially as individual liberty is at risk, on the other.   

The Court then noted that "The reality of the matter is that [Mr Vik], as found by Teare J (in one of the judgments under appeal), “…is a man who will do what is necessary to prevent DB obtaining its judgment debt”.  That said, whatever the underlying “merits”, [Deutsche Bank] is not entitled to succeed unless its submissions are justified in terms of the jurisdictional limits of this Court".

In July 2015, Teare J made a CPR 71 order that Mr Vik attend court to be cross-examined about the financial position of the judgment debtor company of which he had been sole shareholder and director.  Following that cross-examination, Deutsche Bank sought permission to serve an application for a suspended committal order on Mr Vik out of the jurisdiction (under CPR 81.4).  Mr Vik argued that the committal application was brought in respect of alleged breaches of a CPR 71 order; accordingly, the mandatory regime furnished by CPR 71.8 applied and the bank was not free, at its option, to proceed under CPR 81.4.

In addressing this point, the Court of Appeal noted that "there was a certain irony in Mr Vik contending for the (exclusive) application of CPR 71.8 rather than CPR 81, with its greater protections for him as an alleged contemnor".  It felt that the motivation was not hard to find:  CPR 81.4 has extraterritorial reach whereas CPR 71.8 did not.  It went on to uphold Teare J's first instance judgment as it is implausible that CPR 71.8 provides the sole recourse in the event of breach of a CPR 71 order, to the exclusion of the CPR 81 procedure.

The Court then decided (also against Mr Vik) that an order for committal was incidental to a CPR 71 order.  In doing so, it noted the prominent penal notice making it plain from the outset the consequences of non-compliance:  "It is difficult to read the notice as anything other than an assertion of jurisdiction over Mr Vik to enforce the CPR 71 order, in the event that he failed to comply with it".   The Court also observed that it would "at the least, be curious" for the Court to have jurisdiction to make a CPR 71 order but to lack jurisdiction to enforce compliance with it.

Finally, the Court offered a provisional view that the court’s jurisdiction in “proceedings concerned with the enforcement of judgments” (Art. 24(5), Brussels Recast) did apply to a CPR 71 order and that it must be in the public interest that there should be a specific jurisdictional gateway permitting service on an officer of a company, where the fact that he is out of the jurisdiction is no bar to the making of a committal application. The last point was identified as one where consideration by the Rules Committee would be "most welcome".

[Freshfields acts for Deutsche Bank in this litigation.]