English Court Appoints Receiver Over International Construction Contracts

In a recent case in London, the court granted a very

broad receivership order over 25 unrelated international

construction contracts. The case illustrates the flexibility of the

UK courts and the far-reaching effects they can have on

international projects.

Where a claimant has an unsatisfied UK court order in its favour

and the defendant has assets overseas, the UK courts are available

to help the claimant enforce the judgment debt. One way of doing

this is for the court to grant a worldwide freezing order (i.e. an

order that usually stops a defendant from disposing of some or all

of its assets, wherever they are in the world). Another, albeit

relatively unusual method, is the making of a receivership order

(whereby a receiver is appointed over certain assets of a company)

where it appears to the court to be just and convenient to do

so.

In the recent case of Masri, the parties were involved in

long-running litigation concerning the ownership of an oil

concession in Yemen. The claimant obtained a UK judgment in its

favour for about US$63million. The defendants, part of a large

international construction group, steadfastly refused to pay the

debt despite, in the words of the court, "having available to

them substantial funds out of which they could easily pay the

judgment debt without in any way imperilling their ability to carry

on their diverse and successful businesses".

Previous attempts to enforce the judgment debt by way of a

receivership order in relation to the interest of the defendant in

the oil concession were thwarted by the defendant deferring its

entitlement to revenue, apparently indefinitely.

The claimant therefore sought from the UK courts a further

receivership order to enforce the debt over 38 international

construction projects between the defendants and parties unrelated

to the proceedings (some of which were sovereign nations). The

receivables under those contracts were said to be in the region of

US$160million.

The defendants resisted the making of the order on five broad

grounds. These included their contention that it would require a

truly exceptional case to justify the court granting an order over

the foreign assets of a foreign judgment debtor and that the order

should not invite or require the defendants to breach pre-existing

contractual commitments under the 38 unrelated projects.

The judge rejected these grounds and, in granting the order over

the 25 contracts of which the defendants were the sole contractor

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