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HFW wins significant victory in English Court of Appeal for India’s Mahavir Port and Terminal

A team from HFW's London shipping and commodities groups scored a significant win in the English Court of Appeal, acting for India's Mahavir Port and Terminal (MPT) in its successful defence of a complex claim brought by Orexim Trading Limited, thereby overturning a freezing injunction against dealing in a vessel that had been granted on the claimant's ex parte application in August 2016.

Maltese company Orexim issued a claim against MPT and Zen Shipping and Ports (Zen) for alleged breach of a settlement agreement. Orexim also alleged that the sale of a vessel by MPT to Singmalloyd, and an on-sale by Singmalloyd to Zen, was intended to put the assets of MPT beyond the reach of enforcement and claimed relief setting aside the sale and/or declaring that the sale of the vessel was a sham.

MPT and Zen responded by issuing applications challenging such "long arm" jurisdiction.  The High Court held that a claim by a creditor under section 423 of the Insolvency Act 1986 (which relates to “transactions entered into at an undervalue”) does not fall within the jurisdictional gateway permitting service out of the jurisdiction at common law for claims "under an enactment which allows proceedings to be brought", without deciding, as MPT and Zen had also questioned, the issue of whether or not the courts of England and Wales were sufficiently connected with the alleged dissipation of assets.

The Court of Appeal then held that the Court does have the power to permit service of a section 423 claim outside England and Wales, but decided that, in this case, there was insufficient connection with England and Wales, and that the court below should therefore have declined to exercise its discretion to allow permission to serve the claim form outside the jurisdiction.  Consequently, the appeal was dismissed and the original injunction was ordered to be lifted with immediate effect.

Source: David Morriss / HFW

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