0

CONFLICT OF LAWS
COURSE MODULE

MICHELLE MANDA
CAVENDISH UNIVERSITY ZAMBIA
Faculty of Law
1
TOPIC 1 NATURE AND SCOPE OF CONFLICT OF LAWS 3 hours
The English (and common law) Conflict of Laws is a body of rules whose purpose is to
assist the court in deciding a matter where there is a foreign element. In doing so the court
must consider the matter bearing in mind the following three aspects; (i) the jurisdiction
of an English court, in the sense of its competence to hear and determine a case; (ii) the
selection of the appropriate rules of a system of law, English or foreign, which it
should apply in deciding a case over which it has jurisdiction (the rules governing this
selection are known as ‘choice of law’ rules); and (iii) the recognition and enforcement
of judgments rendered by foreign courts or awards of foreign arbitrations.

A jurisdictional question can arise in any kind of case; it usually does so because the
proposed defendant is not in England when the claimant tries to serve him with the
process of the English court. A choice of law problem can arise in any civil action.
The conflict of laws is concerned with all of the civil and commercial law. (It is not
concerned with criminal, constitutional or administrative cases.) It covers the law of
obligations; contract and tort, and the law of property both immovable and movable,
whether a question of title arises inter vivos or by way of succession. It is concerned also
with family law, including marriage and divorce, and guardianship and the relations of
parent and child. Recognition or enforcement of a judgment in some civil or commercial
matter may be called for whether it was for breach of contract or a tort (delict) or dealt
with the ownership of property or concerned status, such as a decree of divorce or nullity
of marriage or a custody or adoption order.

Two names for the subject are in common use; however, they are interchangeable. Neither
is wholly accurate or properly descriptive. The name ‘conflict of laws’ is somewhat
misleading, since the object of this branch of the law is to eliminate any conflict between
two or more systems of law (including English law) which have competing claims to
govern the issue which is before the court, rather than to provoke such a conflict, as the
words may appear to suggest. However, it was the name given to the subject by the
eminent jurist A. V. Dicey, when he published his treatise, the first coherent account by an
English lawyer of its rules and principles, in 1863 and it has been hallowed by use ever
since.
Another name is ‘private international law’, which is in common use in mainly civil
jurisdictions particularly in the United States of America and Europe.

APPLICATION OF THE RULES

In terms of its application, every country in the world which is not part of England and
Wales is a foreign country and its foreign law. This means that not only totally foreign
independent countries such as France or Russia, or independent Commonwealth

2
countries, such as India, Zambia or New Zealand, are foreign countries but also British
Colonies such as the Falkland Islands. Moreover, the other parts of the United Kingdom –
Scotland and Northern Ireland – are foreign countries for present purposes, as are the
other British Islands, the Isle of Man, Jersey and Guernsey. It may be that the rules of
another system are identical with those of English law, or that they are found in legislation
such as the Companies Act 1985 which extends to both England and Scotland. But if say,
New Zealand or Scots law falls to be applied by an English court, it is nonetheless New
Zealand or Scots law which is being applied, and not English law, even though these are
identical.1
In the case of foreign countries with a federal constitutional organisation, reference to the
foreign country or law is not generally to the state in an international sense, but to one of
the component parts thereof, if these are regarded in the constitutional law of that country
as being separate entities having separate legal systems. Thus, the reference is not usually
to the United States of America, but to a state therein, such as New York or California, or to
Canada, but to a province, for example Ontario or Quebec, or to Australia, but to one of its
states, such as Victoria or New South Wales.
THE BASIS OF CONFLICT OF LAWS
The rationale for a municipal court applying foreign law in a conflict of law situation is
clearly expressed by Cheshire and North2 who put it in the following terms:
There is no sacred principle that pervades all decisions but, when the circumstances indicate
that the internal law of a foreign country will provide a solution more just, more convenient
and more in accord with the expectations of the parties than the internal law of England, the
English judge does not hesitate to give effect to the foreign rules.
Nevertheless, the following reasons for the application of a foreign law can be put forward.
1 Justice
An underlying reason for applying a foreign law, rather than English law, is to serve the
interests of the parties to the case and achieve justice. It would be unjust to treat parties,
who entered into a contract unsupported by consideration in Italy, as if they had
contracted under English law, and accordingly declare their contract void for lack of
consideration (see Re Bonacina (1912)). It is clear that English courts apply Italian law in
order to do justice between the parties.
2 Comity
Although the old theory that comity is the main foundation of the conflict of laws has faded
away, its impact cannot be excluded altogether. Even today, references to comity are
sometimes found in English judgments (see Travers v Holley (1953); and Igra v Igra
(1951)). If, for example, first cousins domiciled in Portugal marry in England: suppose that
such a marriage is valid by English law, but void by Portuguese law. The English court will

1
J.G. Collier, Conflict of Laws, 3rd edition pg 6
2
Private International Law, 12th edn, p 39

3
hold this marriage void, even if the parties wished it to be valid. (This may be inferred
from the Court of Appeal decision in Sottomayor v De Barros(1877).)Clearly, this decision
does not serve the interests of the parties, but it is based on comity, partly to protect the
interests of a foreign country and partly in the expectation that the favour will be
returned.
3 Public policy
Whatever the bases for the application of a foreign law are, the question is how far, if at all,
should English public policy be relevant? In other words, will the English court enforce a
contract for prostitution, albeit valid by its proper law? Will it enforce a contract for
slavery, although valid in the lex loci solutionis Scarman J observed in In the Estate of Fuld
(No 3) (1968):
An English court will refuse to apply a law which outrages its sense of justice or decency. But,
before it exercises such power, it must consider the relevant foreign law as a whole.
Hence, it is a general principle of the conflict of laws that a rule of foreign law, which
would be applicable under the lex causae (that is, the governing law), may be disregarded
if its application would be contrary to public policy. This doctrine is clearly necessary in
the context of conflict of laws, but its boundaries cannot be easily defined. 3

CONNECTING FACTORS
The choice of l aw rules which link an event, dispute or person to a particular legal system
are also known as the connecting factors. These are known by their latin terms and are
cardinal in determining the applicable law in eliminating a conflict.
Some of these are:
Lex causae – the law which governs an issue.
The following are examples:
Lex actus – the law governing a transaction, such as the applicable law of a contract.
Lex domicilii – the law of a person’s domicile
Lex fori – the law administered by the court hearing the case. English law is the lex fori for
an English court.
Lex loci actus – the law of the place where a transaction is concluded
in relation to the conclusion of a contract called lex loci contractus
the law of place of the celebration of a marriage lex loci celebrationis.
Lex loci delicti commissi – the law of the place where a tort is committed

3
Abla Mayss, Principles of Conflict of Laws 3rd ed pg 5

4
Lex loci solutionis – the law of the place of performance (of a contract)
Lex situs – the law of the place where property is situated

Problems may occur because of conflicts between different legal systems and they may
arise in three ways.
(1) The case may fall into one legal category in the view of the lex fori (English law) but
into another by the foreign law which is alleged to be the lex causae, or applicable law.
Thus, English law may regard the case as being concerned with formalities of marriage,
but French law may regard it as raising the question of capacity to marry.
(2) English law and the foreign (say, French) law may agree on the legal category, and on
the connecting factor. But this conceals a latent conflict, because the two laws mean
different things by the connecting factor. Thus, under both laws succession to movables is
governed by the law of the last domicile of the deceased. However, by the English law of
domicile, he died domiciled in France; under French law he died domiciled in England.
(3) There is a patent conflict between the respective choice of law rules, since they employ
different connecting factors, as where English law regards succession to movables as
governed by the law of the domicile, but by the foreign law it is governed by the law of the
nationality.
(1) involves the question of ‘characterisation’; (2) involves the question of the
interpretation of the connecting factor; (2) and (3) both involve the doctrine of renvoi.
These three will be dealt with in the following order: (i) the connecting factor, since it is
the easiest, (ii) characterisation and (iii) the doctrine of renvoi.4

CONNECTING FACTORS
Connecting factors employed by the conflict of laws are not very numerous. They include
the personal law (domicile, habitual residence and, very rarely, nationality), the place
where the transaction takes place (as place of celebration of a marriage or the place of
contracting), the place of performance (as in contracts), the intention of the parties, the
situs (the place where property is situated) and the place where the court (forum) is
sitting.
Since the conflict of laws forms part of English law, English law alone can determine when
a foreign law is to be applied. It follows from this that English law must not only select the
connecting factor, it must also say what it means. This is clear, though it is only in respect
of two connecting factors, domicile and, for jurisdictional purposes, the place of
contracting, that authority exists.
Thus, if both English and French law use domicile as a connecting factor, but by English
4
Ibid pg 12

5
law a person is domiciled in France and by French law in England, he will be regarded by
an English court as domiciled in France.
In the case of Re Annesley5
Mrs A died domiciled in France according to English law. By French
law she had never acquired a domicile there. Russell J held that Mrs A
died domiciled in France.

CLASSIFICATION OR CHARACTERISATION
In a conflict case, much depends on how the issue is classified or characterised. Is it an
issue of breach of contract or the commission of a tort? This may be labelled as
‘classification of the cause of action. Once this has been determined, the next stage is to
ascertain the governing law which, as we have seen, depends on some connecting factors,
such as the lex situs, the lex loci delicti, the lex domicilii, and so forth. These factors link the
issue to a legal system. At this stage, a second type of classification has to be done in order
to identify the legal characteristic of a particular rule.

Classification as to a Cause of action

Before the English court can proceed to ascertain the lex causae, it has to determine the
particular category into which the action falls. Does the action relate to the formal validity
of a marriage, intestate succession to movables, or some other category? Given the
standard categories operating in English law, the difficulty arises when some cases do not
fit easily into any single one of them. An action may fall under more than one category. For
example, an employee may be able to sue his employer either in contract or tort; or the
action may not fall under any of them, such as the duty of a father to provide a dowry for
his daughter under Greek law (Phrantzes v Argenti (1960)6). The crucial question,
therefore, is how does the English court classify the cause of action? Is the classification
made according to English internal law? It is obvious that the classification process is very
crucial to the outcome of cases. However, case law does not show how this process is or
should be conducted. According to Cheshire and North (Private International Law, 12th
edn, p 45):
There can be little doubt that classification of the cause of action is in practice effected on
the basis of the law of the forum…But, since the classification is required for a case
containing a foreign element, it should not necessarily be identical with that which would be
appropriate in a purely domestic case.

5
(1926) Ch692
6
2 QB 19

6
Classification as to the rule of law
Once the legal category of a given case has been identified, the next stage is to apply the
relevant choice of law rules in order to identify the lex causae. However, even at this stage,
it may be necessary to classify a particular rule in order to determine whether it falls
within one choice of law rule or another. This process can be better illustrated by
examining two choice of law rules. For instance, capacity to marry is governed by the law
of each party’s ante-nuptial domicile (that is, the dual-domicile rule), and the formal
validity of a marriage is governed by the law of the place where the marriage was
celebrated. A problem of characterisation will arise if it is doubtful whether a certain rule
of the domicile of one party is an issue of capacity, in which case the dual-domicile rule
will apply, or whether it is an issue of formal validity, in which case it will not apply. 7 A
good illustration of this issue can be found in the case of Ogden v Ogden(1908)8.
A domiciled Englishwoman married in England, a domiciled French man aged19. By
French law, a man of that age needed his parents’ consent to marry and, without such
consent, the marriage was voidable. In fact, the husband had not obtained such consent.
How did the court classify this issue of consent? Was it an issue of formal validity and,
therefore, the rule would not be applicable, or was it an issue of capacity, in which case it
would apply? The Court of Appeal classified it as a rule of formal validity and, therefore,
declined to apply the dual-domicile rule, for the marriage had been celebrated in England.
In this case, the issue involved a classification of a foreign rule, but what if it relates to an
English rule?
The case of Leroux v Brown (1852)9 illustrates the process applied to an English rule. The
case concerned an oral agreement made in France between a French employee and an
English employer whereby the former was to work in France for a period longer than a
year. This oral contract was governed by French law, under which the contract was
formally and essentially valid. The employee brought an action in the English court to
enforce the contract. The employer pleaded that the contract was unenforceable in
England on the ground that the then English Statute of Frauds provided that no action
shall lie upon a contract which was to last more than a year, unless the agreement was in
writing.

THE DOCTRINE OF RENVOI

When an English court refers an issue to a foreign law, it nearly always refers to the
domestic rules of that law. In some instances, however, the court treats this reference to
the foreign law as a reference to the conflict rules of that law. This is called renvoi. For
example, in Re Ross10, the testatrix, a British national, died domiciled in Italy. She left
movable property in England and movable and immovable property in Italy. Her wills in

7
Abla J. Mayss, Principles of Conflict of Laws 3rd ed page 6
8
P 46
9
12 CB 801
10
(1930) Ch 377

7
relation to her English and Italian estates were valid by English domestic law of
succession, but invalid by Italian domestic law. This was because she had not left half of
the estates to her son, who contested the wills. Under English conflict of laws, the essential
validity of the wills was governed by Italian law as the law of the domicile of the testatrix
(in relation to the movables), and as the lex situs (in relation to the immovables). Under
Italian conflict of laws, this issue was governed by the domestic law of the nationality of
the testatrix. As a result, the English court applied English domestic law and the wills were
held to be valid.
Hence, the issue of renvoi arises when a rule of conflict of laws refers to the whole of the
law of a foreign country, but the conflict rule of the foreign country would have referred
the question to the law of the first country (that is, remission), or the law of some other
country (that is, transmission). There are two forms of renvoi: single or partial renvoi, and
double or total renvoi.
Single or partial renvoi
Under single or partial renvoi, the English court accepts the reference back from the
country referred to by the English choice of law rule. For instance, if an English court is
referred by its own choice of law rules to the law of country X, but the choice of law rules
of X refers such case back to English law, then the English court must apply its own
domestic law to the case. This form has been adopted in some continental countries, but it
is not part of English law.
Double or total renvoi
Under double or total renvoi, the English court, which is referred by its conflict rules to the
foreign country, must apply the law which a court in that foreign country would apply if it
were hearing the case. This means that the English court not only applies the foreign
country’s choice of law rule, but also its doctrine of renvoi. The operation of this form of
renvoi is illustrated in Re Annesley (1926),where the testatrix, a British national, died
domiciled in France according to English law, but domiciled in England according to
French law. Her will was valid by English domestic law, but invalid by French domestic
law, for she had failed to leave two thirds of her property to her children.
Under the English choice of law rule, the essential validity of the will was governed by
French law as the law of her domicile at the time of her death. The court applied the total
renvoi theory and held that the will was governed by French domestic law for the
following reasons: the English court took the reference to French law to mean that the
case must be decided as a French court would decide it. According to French conflict rules,
the succession was governed by English law as the law of the testatrix’s nationality.
However, a French court would apply the conflict rules of that law, that is, it would accept
the renvoi, and apply French domestic law.

Questions to consider under this topic:

8
 1. Conflict of law rules are applied when the English courts seek to harmonise matters
involving a foreign element.
(a) What are the preliminary factors that a municipal court would have to consider
when adjudicating a matter with a foreign element?
(b) What is the justification for a municipal court to apply foreign laws rather than
the lex fori- laws of the forum?

2. Conflict of Law rules permit a Plaintiff to sue a Defendant in the most appropriate
jurisdiction.
Discuss the following legal principles with the aid of relevant case authorities:

(a) Defendant present within the jurisdiction

(b) The rule of “forum non conveniens”
(c) Anti-suit injunctions and the circumstances under which they may be pleaded.
(d) The application of “lis alibi pendens”

TOPIC 2 JURISDICTION OF THE ENGLISH COURT IN CONFLICT OF LAWS

3 hours
Conflict of law rules concerning the choice of law permit a plaintiff to sue a defendant who
is within the jurisdiction or even outside the jurisdiction where the plaintiff is located.
This serves an important purpose in commercial transactions where aggrieved parties are
originally from different countries due to international trade .
Under the common law rules, the jurisdiction of the English court may be assumed on any
one of the following grounds:
(a) where the writ is served on a defendant physically present in England;

9
 (b) where the defendant voluntarily submits to the jurisdiction of the English
court; or
(c) where the plaintiff obtains leave from the High Court to serve the writ on
the defendant outside England in accordance with one or more heads under RSC Ord
11 r 1(1).
Each of these grounds will be examined separately.

1. DEFENDANT PRESENT IN THE JURISDICTION

Provided that the defendant is not domiciled within the EC/EFTA, the English court has
power to hear the case when a writ is legally served on a defendant physically present in
England.The application of this principle varies, depending on whether the defendant is an
individual, a corporation or a partnership firm.
(a) Individuals
A writ may be served on any individual who is present in England, however short his or
her visit may be. For instance, in Maharanee of Baroda v Wildenstein11, (HRH Maharanee
Seethadevi Gaekwar of Baroda v Daniel Wildenstein) the plaintiff, an Indian princess
residing in France, brought an action in England against the defendant, an art expert also
residing in France. The action was based on breach of a contract for the sale of a painting
in France, stated to be by the artist Boucher, but which was allegedly a forgery. The writ
was served on the defendant whilst he was in England on a one day visit to Ascot races.
The defendant objected to the jurisdiction of the English court, but the Court of Appeal
held that he had been properly served, and accordingly it had competent jurisdiction to
hear the case.
Also see: Carrick v Hancock

(b) Corporations
By virtue of ss 691, 695 and 725 of the Companies Act 1985 (UK), a corporation is deemed
present in England in three situations:
(a) According to s797 where a company is registered in England, it is deemed to be
present within the jurisdiction even if it only carries on business abroad, and thus, service of
the writ may be effected at its registered office in England. Where a company is registered in
Scotland, and carries on business in England, the jurisdiction of the English court can be
assumed by serving a writ at the company’s principal place of business in England and by
sending a copy to its registered office in Scotland;
(b) if the company is incorporated outside England, but has a place of business
11
(1972) 2 AllER 689

10
 in England, then by virtue of s 691 of the CA 1985, it must file the name and address
of a person in England who is authorised to accept service of the writ on its behalf.
Provided that the name of such a person remains on file, service of the writ on him or
her makes the company subject to the jurisdiction of the English court, regardless of
the fact that the company no longer carries on business in England. This latter
provision is clearly inserted to prevent foreign companies from incurring debts in
England and then closing down, thus leaving creditors without a remedy. If, however,
this was considered to be unfair on the defendant company, it must be noted that the
latter might be able to seek successfully a stay of the English proceedings on the
ground of forum non conveniens, that is, on the ground that there is another forum
which is more appropriate than England
( c ) if no such address is filed, or if the person named dies, or for any reason the writ
cannot be served in accordance with s 691 above, then by virtue of s 695 of the CA
1985, service may be effected by sending the writ to ‘any place of business
established by the company in Great Britain’. This provision, which replaced s 412 of
the Companies Act 1948 (UK), was interpreted by the Court of Appeal in Deverall v
Grant Advertising Inc12, to mean that the place must remain established at the time
of service.
The above provisions give rise to the question of when a foreign company is said to have
established a place of business in England. This question can only be answered by
examining the activities of the defendant company in England. For instance, in South
India Shipping Corpn Ltd v Export-Import Bank of Korea 13 the plaintiff, a company
incorporated in India, brought a claim against the defendant bank, which was
incorporated in Korea where its main business was conducted. However, the bank rented
an office in London for the purposes of gathering information and maintaining public
relations with other banking and financial institutions in the UK and Europe. No banking
transactions were concluded from the London office, nor was the office registered as a
place of business under the Companies Act 1948, then in force. The writ was served at the
office in London. The defendant contended that, as they had not established a place of
business in Great Britain, the writ was not duly served. The Court of Appeal held that a
company was said to have established a place of business in Great Britain if it carried on
part of its business activities here, and it was not necessary for those activities to be either
a substantial part of, or more than incidental to, the main object of the company.
Accordingly, the defendant was duly served with the writ, for it had established a place of
business here. It was immaterial that the defendant neither concluded any banking
transactions from the London office, nor had banking dealings with the general public.
Service of originating summons in Zambia follows the common law procedure.

( c ) Partnerships

12
(1955) Ch 111
13
(1985) 2 AllER 219

11
In the case of partnerships, a writ can be served on any individual partner who is present
in England at the time of the service. Service of the writ may now also be effected on the
partnership firm by virtue of Rules of the Supreme Court Ord 81 r 1, which provides that:
…any two or more persons claiming to be entitled, or alleged to be liable, as partners in
respect of a cause of action and carrying on business within the jurisdiction may sue, or be
sued, in the name of the firm (if any) of which they were partners at the time when the
cause of action accrued.
This rule means that a writ can be served at the firm’s place of business in England, even if
the individual partners are outside England14.

SUBMISSION TO THE JURISDICTION

At common law, the English court may have jurisdiction over the defendant if he or she
submits to the court. Submission may be effected in a variety of ways. A defendant may
enter an appearance to defend the case on its merits, such as disputing his or her alleged
liability; or he or she may instruct a solicitor to accept service on his or her behalf in
accordance with RSC Ord 11 r 1(4). Submission may also be effected where, having
commenced an action in the English court as a plaintiff, he or she is faced with a
counterclaim brought by the defendant and which is related to the original claim (RSC Ord
15 r 2). In all these cases, the defendant can be said to have submitted to the jurisdiction,
but if he or she appears merely to contest the jurisdiction of the court, then according to
Williams and Glyn’s Bank v Astro Dinamico15, he or she is not deemed to have submitted
thereto.
Submission may also be inferred from the terms of a contract, for example, a contract may
expressly or impliedly indicate that a party has agreed to submit to the jurisdiction of the
English court. Save in very exceptional circumstances, he or she will be held to that
agreement.
Submission, however, applies only to actions in personam and does not confer jurisdiction
in divorce or nullity proceedings, or in relation to an action principally dealing with an
issue of title to foreign land.

DEFENDANT OUTSIDE THE JURISDICTION

Where the defendant has no physical presence in England, or does not submit to the
jurisdiction, or if, prior to the issue of the writ, he or she goes abroad and does not return,
the English court is empowered to allow service of the writ out of the jurisdiction in
specific cases. This power, which is contained in RSC Ord 11 r 1(1), is discretionary.
Service of the writ out of the jurisdiction under Ord 11 r 1(1) requires the permission of

14
Abla Mayss, Principles of Conflict of Laws pg 16
15
(1984) 1 WLR 438

12
the High Court. Permission is no mere formality and it will only be granted if the case is a
proper one for service out of the jurisdiction (Ord 11 r 4(2)). The onus is on the plaintiff to
satisfy the court that the cause of action falls under one of the heads of Ord 11 r 1(1); that
he or she has a good arguable case; that, on the merits, there is a serious issue to be tried;
and that the court’s discretion should be exercised to allow service out of the jurisdiction.
The fact that the plaintiff must show that he has a good arguable case means that he or she
must do more than make a prima facie case that the dispute falls under one or more heads
of r 1(1). This, however, does not mean that he or she has to satisfy the court beyond
reasonable doubt. As to the merits of the case, the test was recently laid down by the
House of Lords in Seaconsar Far East v Bank Markazi Jomouri Islami Iran16, where Lord
Goff, giving the leading judgment, held that;
the correct approach was that where jurisdiction was established under Ord11 r 1(1) and
England was also established as forum convenient, it was sufficient for the plaintiff to
establish that there was a serious issue to be tried, rather than show a good arguable case on
the merits; that is, there was a substantial question of fact or law, or both, arising on the
facts disclosed by the affidavits which the plaintiff desired to have tried 17.

PREVENTION OF FORUM SHOPPING AND THE STAYING OF ACTIONS

It appears from the foregoing discussion that English common law rules allow anyone to
invoke, or become amenable to, the jurisdiction, provided that the defendant has been
served with a writ. Service may be effected either by the defendant’s presence, however
short, in England; or if he or she was outside England, by means of RSC Ord 11 r 1(1). This
approach, which has often been described as exorbitant, empowers English courts to hear
cases which, in some instances, may be inappropriate for trial in England. It also leads to
the plaintiff forum shopping for the best remedy available.
Lord Pearson defined forum shopping in Boys v Chaplin18 as:
[A] plaintiff bypassing his natural forum and bringing his action in some alien forum
which would give him relief or benefits which would not be available to him in the
natural forum.
In other words, whenever a plaintiff has a choice between a number of fora in which to
litigate, he or she is bound to go for the most advantageous forum. For instance, the
plaintiff may be tempted to litigate in the USA, where a contingent fee system is in
operation, and where pre-trial discovery and punitive damages are available.
Alternatively, he or she may choose to sue in England, where an adversarial system is in
operation, whereby he or she can bring their own expert witnesses, or where the level of
damages is higher than that on the continent. The plaintiff’s choice of jurisdiction, albeit
advantageous to him or her, is more often than not to the detriment of the defendant.

16
(1993) 4 AllER 163
17
Abla Mayss, Principles of Conflict of Laws pg 17
18
(1971) AC 356

13
Hence, questions arise as to whether plaintiffs should be allowed to forum shop for the
best remedy available, and whether, and in what way, forum shopping can be controlled.
The English court has inherent jurisdiction, reinforced by statute (namely, s 49(3) of the
Supreme Court Act 1981), to stay an action in England, or to restrain by injunction, a
plaintiff from continuing the proceedings in a foreign court, whenever it is necessary to do
so in order to preserve justice. This power is highly discretionary. It may be invoked on
the ground of forum non conveniens in the context of stays of action, being the subject
matter of this paragraph, or in the context of injunctions on the ground that the foreign
proceedings are vexatious and oppressive.
Where the writ has been properly served, the English court will proceed with the case
unless the defendant proves that England is not the natural forum and that there is
another available forum which is clearly and distinctly more appropriate for the trial of
the action; that is, England is forum non conveniens. In such cases, the defendant may base
his application on one of three grounds:
• first, the defendant may simply claim that the action ought to be tried in the foreign
forum rather than in England, that is, England is forum non conveniens;
• secondly, the defendant may apply for the English action to be stayed because
proceedings had already been instituted in a foreign forum, that is, a case of lis alibi
pendens; or
• thirdly, the defendant requests a stay of the English action on the basis that the
parties had agreed that disputes of the type in question would be subject to the
exclusive jurisdiction of another forum.
In all the above scenarios, the applicable test is essentially the same, that is, of forum non
conveniens, but the outcome of the application for a stay may differ depending on the
ground upon which the defendant bases his or her application.

FORUM NON CONVENIENS

The doctrine of forum non conveniens, whilst it had been applied in Scotland and the USA
for a number of years, was not accepted in England until relatively recently. In fact, it was
once vehemently rejected by English judges and a stay of proceedings was confined only
to cases of vexation and oppression. For instance, in St Pierre v South American Stores
Ltd19 Scott LJ had stated the test in relation to stays in the following terms:
(1) A mere balance of convenience is not a sufficient ground for depriving a
plaintiff of the advantages of prosecuting his action in an English court if it is
otherwise properly brought. The right of access to the King’s Court must not be
lightly refused.
(2) In order to justify a stay, two conditions must be satisfied, one positive and
19
(1936) 1 KB 382

14
 the other negative:
(a) the defendant must satisfy the court that the continuance of the
action would work an injustice because it would be oppressive or vexatious
to him or would be an abuse of the process of the court in some other way;
and
(b) the stay must not cause an injustice to the plaintiff. On both, the
burden of proof is on the defendant.
Evidentially, this test was not sufficiently effective to control forum shopping. A stay
would only be granted if the plaintiff ‘set out deliberately to harass the defendant’ by
litigating in England. It was not until the House of Lords’ decision in The Atlantic Star20 that
a sharp movement towards a broader test was signalled. This decision is considered as the
raw material from which the doctrine of forum non conveniens has evolved.
The process of liberalisation continued with the subsequent decision of the House of Lords
in MacShannon v Rockware Glass Ltd21, which effectively repudiated the old vocabulary
and acknowledged a new test, hard to distinguish from forum non conveniens. Lord Diplock
reformulated the second part of Scott LJ’s test as follows:
In order to justify a stay, two conditions must be satisfied, one positive and the other
negative: (a) the defendant must satisfy the court that there is another forum to whose
jurisdiction he is amenable in which justice can be done between the parties at
substantially less inconvenience and expense; and (b) the stay must not deprive the
plaintiff of a legitimate personal or juridical advantage which would be available to him if
he invoked the jurisdiction of the English court.
Final express acceptance of the application of the doctrine forum non conveniens in cases of
stays came in the House of Lords decision in The Abidin Daver22, where Lord Diplock was
able to declare that ‘judicial chauvinism has been replaced by judicial comity to an extent
which I think the time is now right to acknowledge frankly [that the test applicable to
stays] is…indistinguishable from the Scottish legal doctrine of forum non conveniens’.
However, the law was exhaustively re-examined and restated by the House of Lords in
Spiliada Maritime Corpn v Cansulex Ltd23, which landmarked the modern law on stay so
faction. Notwithstanding that this case was concerned with the exercise of the discretion
to serve a writ out of the jurisdiction under RSC Ord 11 r 1(1), the House of Lords set out a
number of principles, on the basis of which the discretion with regard to stays should be
exercised:
(a) the basic principle is that a stay will only be granted on the ground of forum
non conveniens where the court is satisfied that there is some other available
forum, having competent jurisdiction, which is the appropriate forum for the trial

20
(1974) AC 436
21
(1978) AC 795
22
(1984) AC 398
23
(1986) 3 AllER 843

15
 of the action, that is, in which the case may be tried more suitably for the interests
of all the parties and the ends of justice;
(b) in considering whether there was another forum which was more
appropriate, the court would look for that forum with which the action had the
most real and substantial connection, for example, in terms of convenience or
expense, availability of witnesses, the law governing the relevant transaction, and
the places where the parties resided or carried on business;
(c) the burden of proof rests on the defendant to persuade the court to exercise
its discretion to grant a stay…if the court is satisfied that there is another available
forum which is prima facie the appropriate forum for the trial of the action, the
burden will then shift to the plaintiff to show that there are special circumstances
by reason of which justice requires that the trial should nevertheless take place in
this country;
the fact that the granting of a stay of English proceedings…might deprive the plaintiff of a
legitimate personal or juridical advantage available to him under the English jurisdiction
would not, as a general rule, deter the court from granting a stay…if it was satisfied that
substantial justice would be done to all the parties in the available appropriate forum. 24

Accordingly, the test in The Spiliada is a two stage process. At the first stage, the
defendant must satisfy the court that England is not the appropriate forum and that there
is another available forum which is prima facie the appropriate one for the trial of the
action. In identifying the appropriate forum, the search is for the one which has the most
real and substantial connection with the dispute. This is ascertained by weighing relevant
connecting factors, such as convenience and expense, availability of witnesses, the place
where the parties reside or carry on business, the law governing the cause of action, and
so forth. The degree of weight accorded to each connecting factor varies depending on the
circumstances of each particular dispute. Whilst a specific factor may be of great
significance in one case, it may be irrelevant in another. It is only by examining the harvest
of decided cases that one is able to determine the practical importance of the various
connecting factors in ascertaining the appropriate forum.
It is evident that where the parties lack territorial connection with the jurisdiction, then
prima facie, England is not the appropriate forum. Indeed, this was a decisive factor in
favour of granting a stay of action in the case of De Dampierre v De Dampierre25. In this
case, a husband and wife, both French nationals married in France, moved to London,
where the husband carried on business on the family estate. Soon after, the wife had a
child and the husband bought them a house in London. A few years later, the wife
established a business in New York, where she took her child, and declared her
unwillingness to return to England. The husband started divorce proceedings in France
and the wife issued a divorce petition in the English court. Following the husband’s
24
Abla Mayss, Principlesof Conflictof Laws 3rd ed pg 25
25
(1987) 2 AllER 1

16
application for a stay of the English proceedings, the House of Lords applied the
Spiliada test and held that the wife’s connection with England was tenuous. She was
resident in the USA and had voluntarily severed all connection with England before
instituting her English divorce proceedings. She was a French national, and was
married in France, where she could litigate as easily as in England. Furthermore, the
husband had, by then, sold his property in England and returned to reside in France.
Hence, there were practically no factors connecting the case with England. Accordingly,
prima facie, France clearly provided the appropriate forum for the resolution of the
dispute, to the effect that a stay would be granted unless justice required the contrary.

THE DOCTRINE OF LIS ALIBI PENDENS

In some instances, proceedings between the same parties arising out of the same dispute
are simultaneously pending in the English court and the courts of another country. This is
referred to as a case for lis alibi pendens.
Under the traditional rules, the English court may be asked either by the defendant to the
English proceedings to stay the action in England, or by the plaintiff to the English
proceedings to grant an injunction restraining the defendant from continuing with the
foreign proceedings.
In principle, the applicable test is basically that of The Spiliada(1986).However, an
important additional element to be taken into account under the doctrine of forum non
conveniens is that to refuse a stay of the English proceedings would result in allowing two
sets of proceedings being pursued concurrently in two different jurisdictions which
would, thus, involve more expense, delay and inconvenience to the parties. In essence,that
was one of the factors which tipped the scales in favour of granting a stay of the English
proceedings in Cleveland Museum of Art v Capricorn Art International SA26.Also, in DR
Insurance Co v Central National Insurance Co27, service out of the jurisdiction was set
aside because concurrent proceedings were taking place in New York. Resolution of the
dispute, continuing the English action would have resulted in an undesirable duplication
of proceedings. This, combined with the fact that, it may be recalled, the claim in the
English court was for a negative declaration, provided strong grounds for dismissing the
English proceedings. Allowing lis alibi pendens can also lead to conflicting judgments and
problems of enforcement. Lord Goff, in The Spiliada, did not indicate how the reformulated
test on forum non conveniens applied to cases of lis alibi pendens. However, he stated in De
Dampierre v De Dampierre28 that the ‘same principle is applicable whether or not there are
other relevant proceedings already pending in the alternative forum’.In fact, The Abidin

26
(1990) 2 Lloyds Rep 166
27
(1996) 1 Lloyd’s Rep 74
28
(1987) 2 AllER 1

17
Daver29,which landmarked the doctrine of forum non conveniens in English law, was a lis
alibi pendens case. In this case, a collision occurred within Turkish waters between the
plaintiffs’ ship, a Cuban vessel, and the defendants’ ship, a Turkish vessel. Soon after, the
defendants commenced proceedings in the Turkish court, claiming damages against the
plaintiffs. The plaintiffs then commenced an action in rem in the English court. Following
the defendants’ application for a stay of the English proceedings on the ground that the
Turkish court was a more appropriate forum, the House of Lords applied the doctrine of
forum non conveniens and held that Turkey was the more appropriate forum for the trial of
the action. A crucial factor pointing towards Turkey was the fact that the Turkish court
had already appointed a surveyor, who prepared a report for the court.

A FOREIGN JURISDICTION CLAUSE

Under the common law rules, where the parties have agreed in a binding contract to
submit their disputes to the jurisdiction of a foreign court, the English court will not, in
general, allow the parties to resile from their earlier agreed choice of jurisdiction.
Where the jurisdiction clause is in favour of a foreign court, but the plaintiff initiates
proceedings in England, then according to The Eleftheria (1970), the court’s discretion
should be exercised in favour of granting a stay unless a strong case for not doing so is
shown. The burden is on the plaintiff to show why a stay should not be granted. In
exercising its discretion, the court should take into account all the circumstances of the
particular case. For instance, the court will address such questions as which is the most
convenient country for the evidence; which is the cheapest; whether the dispute is
governed by a foreign law; how close are the connections of the parties to the relevant
countries; whether the defendant is only seeking a procedural advantage in England; and
so forth.
Hence, the applicable test is basically similar to that of forum non conveniens. However,
here the burden is on the plaintiff to show why the jurisdiction clause should not be
upheld. This is so even if a part of the agreement between the parties is void. In Trendtex
Trading Corpn v Credit Suisse30, an assignment of a cause of action took place in
Switzerland. The agreement included an exclusive jurisdiction clause in favour of the
Swiss courts. The House of Lords granted a stay and held that, although an assignment of a
cause of action is void in England for being against public policy, this did not render the
whole agreement void; accordingly, the choice of jurisdiction clause remained valid.
Conversely, a stay may be refused if the plaintiff can show that either the whole agreement
is void and not voidable, or that the jurisdiction clause itself is void. In MacKender v
Feldia31, a lis alibi pendens case, a contract of insurance was made in London between the
plaintiffs, Lloyd’s underwriters, and the defendants, diamond merchants. The policy
contained an exclusive jurisdiction clause in favour of the Belgian courts, and a choice of
law clause in favour of Belgian law. Some diamonds were lost in Italy and the plaintiff
29
(1984) 1 AllER 470
30
(1981) 3 AllER 520
31
(1967) 2 QB 590

18
insurers refused to indemnify the defendants. They brought an action in the English court,
claiming that the defendants had smuggled the diamonds into Italy; that the contract was
void for illegality and voidable for the defendants’ non-disclosure; and accordingly, the
jurisdiction clause was also void. The Court of Appeal applied English domestic law and
found that the alleged illegality in this instance only made the contract unenforceable; and
that the non-disclosure rendered the contract voidable and not void ab initio. Therefore,
the jurisdiction clause was valid and the action should be tried in the Belgian court.
In accordance with Named El-Chiaty v Thomas Cook Ltd (1992), it seems that an oral
agreement on jurisdiction is as effective as a written one. In this case, the plaintiffs, an
Egyptian tourist company, contracted with the defendants, an international travel
company registered and based in England, to construct a cruise ship. In return, the
defendants agreed to help finance the construction of the vessel and to charter it for use
on their package tours. A series of written contracts were made, whereby it was agreed
that the proper law of the contract was Egyptian, but they were silent as to choice of
jurisdiction. The defendants claimed, however, that during negotiations, the parties had
orally agreed that any disputes would be subject to the exclusive jurisdiction of the
Egyptian courts. Following the failure of the defendants to supply the agreed minimum
number of tourists, the plaintiffs brought an action in the English court. Hirst J held that
the oral agreement on jurisdiction was effective and granted a stay. Applying the Spiliada
test, he stated that the burden was on the plaintiffs to show that there were special
circumstances, by reason of which justice required that the trial should nevertheless take
place in England. He added that the fact that the contract was subject to Egyptian law was
a highly material factor, not only because the Egyptian court was best fitted to adjudicate
its own law, but also because it would avoid the additional expense of bringing in expert
witnesses to debate the foreign law issues.
Moreover, a jurisdiction clause, albeit non-exclusive, creates a prima facie case that the
agreed forum is the appropriate one for litigation. For instance, in The Rothnie (1996), the
plaintiffs and defendants entered into a contract, by which the latter agreed to carry out
repair and maintenance work on the plaintiffs’ vessel in Gibraltar. The contract was
subject to the defendants’ standard terms and conditions, which expressly provided that
the contract was to be governed by the law of Gibraltar and that any disputes arising
therefrom were subject to the non-exclusive jurisdiction of the courts of Gibraltar. It was
held that the fact that the parties had agreed that a certain forum had jurisdiction, albeit
non-exclusive, created a strong prima facie case in favour of that forum as being the
appropriate one. This was so, unless justice required that the trial should, nevertheless,
take place in England.

The English court will, nevertheless, exercise its discretion to refuse a stay where the
parties have agreed to submit their disputes to a foreign jurisdiction, if the plaintiff can
show that justice cannot be obtained in the agreed forum. In Carvalho v Hull Blyth
(Angola) Ltd32 the defendants, a company registered in England, carried on business in
32
(1979) 3 AllER 280

19
Angola through subsidiaries in which the plaintiff owned a 49% shareholding. In a
contract made in Angola, which was then a Portuguese province, the plaintiff, who was
then living there, agreed to sell his shareholding to the defendant, the price payable in four
instalments. The contract contained an exclusive jurisdiction clause in favour of the
Angolan courts. When the defendants failed to pay the fourth instalment, the plaintiff, who
then moved back to Portugal, brought an action for the amount due, in the English court.
The defendants, relying on the jurisdiction clause, applied for a stay. The Court of Appeal
held that the jurisdiction clause in favour of Angola could not be relied upon,
because under the revolutionary government, the Angolan court was no longer a
Portuguese court applying Portuguese municipal law. Moreover, due to the political
and legal changes in Angola, the plaintiff satisfied the court that it was ‘just and
proper’ to refuse the stay.
Similarly, an exclusive jurisdiction clause would not be upheld if its application would lead
to separate additional proceedings on the same facts having to be pursued in the English
court. For example, in Citi-March v Neptune Orient Lines33,the plaintiffs contracted with
the first defendant, a company incorporated and carrying on business in Singapore, for the
carriage of consignments of clothing to London. The bills of lading incorporated an
exclusive jurisdiction clause in favour of the courts of Singapore. Following delivery in
London, it was found that a quantity of the goods was missing. Consequently, the plaintiffs
commenced proceedings in the English court against the first defendant and three other
companies, based in England, which had stored the goods on their premises prior to
delivery to the plaintiffs. The first defendant applied to have service of the English
proceedings set aside on the basis of the exclusive jurisdiction clause. Colman J held that, if
the jurisdiction was to be upheld, therefore requiring the plaintiffs to pursue their claim in
Singapore, it was probable that separate proceedings against the three companies would
have to be pursued in England. This would lead to a clear risk of inconsistent decisions on
the facts. The plaintiffs would also lose the benefit of a composite trial and would be
precluded from having the benefit of obtaining the evidence of all four defendants.
Therefore, strong reason had been shown in favour of ignoring the jurisdiction clause and
maintaining the action in the English court.
A stay of the English proceedings will also be refused where the action is time barred
under the law of the foreign court designated by the clause, and where there is no
substantial difference between the law of England and the law of that foreign country.
Such was the case in The Vishva Prabha34, where the English court declined to grant a
stay in favour of the Indian court.
Conversely, where the parties have agreed to refer their disputes to the jurisdiction of the
English courts, it is highly unlikely that a stay would be granted on the ground that
proceedings had started in a foreign court. This was held to be the case in British
Aerospace v Dee Howard35, where, contrary to their agreed choice of jurisdiction in
favour of the English court, the defendants initiated proceedings in Texas. When the
33
(1996) 2 AllER 545
34
(1979) 2 Lloyd’s Rep 286
35
(1993) 1 Lloyd’s Rep398

20
plaintiffs brought an action in the English court, the defendants applied for a stay of action
on the ground that proceedings were already pending in Texas. They also argued that the
jurisdiction clause, which stated that ‘…the courts of England shall have jurisdiction to
entertain any action…and that in the event of such proceedings being commenced, each
party shall forthwith notify to the other an address in England for the service of
documents’, was not exclusive. The English court refused to grant the stay and held that
the jurisdiction agreement was exclusive, for there was no real purpose in submitting
disputes to the jurisdiction of the English court unless the intention was to make England
exclusive (see, also, Gulf Bank v Mitsubishi Heavy Industries Ltd36 where a jurisdiction
clause in favour of the English court, albeit non-exclusive, was upheld).

PREVENTION OF FORUM SHOPPING AND ANTI-SUIT INJUNCTIONS

In the above discussion, the plaintiff has come ‘shopping’ in the English courts, so to speak.
What if, when the natural forum would be England, he or she went shopping in a foreign
court; or being the defendant in the English proceedings, he or she started cross-
proceedings elsewhere? For example, a plaintiff suffers injuries in an air crash in the UK.
The airline is incorporated in England, the aeroplane was manufactured in England by an
English company, but the company is part of a group with the parent company
incorporated in California. Clearly, the plaintiff has powerful incentives to sue in California
for the following reasons:
(a) pre-trial discovery;
(b) jury trial;
(c) punitive damages; and (d) contingent fee system.
In such cases, the defendant may apply to the English court for an injunction to restrain
the foreign proceedings. The injunction operates in personam. It is granted against the
plaintiff, not the foreign court itself. If it is not complied with, then the person against
whom it is granted will be held in contempt of court. Lord Denning MR stated, in
Castanho v Brown and Root (UK) Ltd37,that injunctions restraining foreign proceedings
should only rarely be granted ‘so as to avoid even the appearance of undue interference
with another court’. In this case, which is considered to be the leading one in the context of
injunctions, the plaintiff, a Portuguese subject resident in Portugal, was employed by the
second defendants, a Panamanian company, on a US ship. The first defendants were an
English company which provided shore services for the ship. Both defendants were part of
a large group of companies based in Texas. The ship was in England when the plaintiff had
an accident, as a result of which he suffered severe personal injury. While in hospital in
England, his English solicitors issued a writ, claiming damages for his injuries. Sometime
later, he was contacted by a firm of Texan attorneys and, on their advice, he discontinued
36
(1994) 1 Lloyd’s Rep 323
37
(1980) 3 WLR 991

21
the English proceedings and started the action in Texas, where he would have the
prospect of higher damages. The defendants applied for an injunction. The House of
Lords discharged the injunction granted in the court of first instance, and held that,
in order to justify the grant of an injunction, it had to be shown that the English
court was a forum to which the defendants were amenable and in which justice
could be done at less inconvenience and expense; and that an injunction would not
deprive the plaintiff of a personal or juridical advantage available to him in the
Texan jurisdiction. On the facts, since the defendants were Texas-based, with an office
and substantial assets in Texas, and the plaintiff would enjoy the prospect of higher
damages, the critical equation between advantage to the plaintiff and disadvantage to the
defendants was solved in the plaintiff’s favour.
It is worth noting that the test which the House of Lords applied in this case was similar to
that then applied in cases where a stay of English proceedings was sought. This was
widely criticised, because it would enable injunctions to be granted more readily, and the
Privy Council, in Société Nationals Industrielle Aérospatiale v Lee Kui Jack 38, decided to
re-adopt the criteria used in the St Pierre case39. In the SNIA case, a plaintiff was killed in a
helicopter crash in Brunei. The helicopter was manufactured in France by a French
company, SNIA, which had a subsidiary in Texas to whom the French company sold
helicopters. At the time of the crash, the helicopter was owned by an English company,
and was operated and serviced by its Malaysian subsidiary under a contract to a Brunei
subsidiary of an international oil company. Proceedings against the French and Malaysian
companies were brought both in Brunei and Texas. The reasons for bringing the action in
Texas were that Texan law was more favourable to the plaintiffs and that US courts
awarded a higher level of damages. The defendants applied for an injunction restraining
the plaintiffs from continuing the Texan proceedings on the ground, inter alia, that it was
highly unlikely that the Malaysian company could be brought before the Texan courts and,
therefore, SNIA would have to claim contribution from the former company in some other
forum. The Court of Appeal of Brunei applied the test applicable to stays of action
and refused to grant the injunction. On appeal, the Privy Council restated the test on
injunctions as follows: as a general rule, a decision to grant an injunction
restraining foreign proceedings would only be made if such pursuit would be
vexatious and oppressive and the injunction would not unjustly deprive the plaintiff
of advantages available to him in the foreign forum. This presupposed that the English
court would provide the natural forum for the trial of the action and that, as a matter of
justice, the injustice to the defendant, if the plaintiff was allowed to pursue the foreign
proceedings, would outweigh the injustice to the plaintiff if he was not allowed to do so. As
the accident occurred in Brunei, the deceased and the plaintiffs were resident there, and
the law governing the claim was the law of Brunei, then Brunei remained the natural
forum for the action. Furthermore, it would be oppressive for the plaintiffs to proceed in
Texas, because the defendants might be unable to pursue their own contribution claim
against the Malaysian company. Accordingly, the injunction was granted.

38
(1987) AC 460
39
(1936) 1 KB 382

22
Despite the fact that the SNIA test was a Privy Council decision and, therefore, is only of a
persuasive nature, English courts have followed it consistently. For instance, in EI Du Pont
De Nemours and Co v Agnew (No 2) (1988) 2 Lloyd’s Rep 240 the plaintiffs applied for
an injunction to restrain the defendants from continuing with the proceedings in the
Illinois court. The Court of Appeal elected to apply the test in the SNIA case, rather than
the test of forum non convenient, and held that an injunction would not be granted. Dillon
LJ rejected the view that the principle to be applied to injunctions was the same as that to
be applied to stays. This was justified on the ground that the test on stays was based on
forum non conveniens, which meant that, once the English court was found to be a natural
and appropriate forum for the action and there was no other available forum which was
more appropriate, a stay would be granted. Were the same test to apply to injunctions, it
would follow that an injunction would almost be automatically granted once England was
found to be the more appropriate forum. This could not be right, since it would lead:
…to the conclusion that, in a case where there [was] simply a difference of view between
the English court and the foreign court as to which [was] the natural forum, the English
court [could] arrogate to itself, by the grant of an injunction, the power to resolve that
dispute.
The same test was applied by the Court of Appeal in the subsequent case of Re Maxwell
Communications Corpn (No2)(1992) BCC 757, where the applicable principles were
summarised by Gildwell LJ in the following terms:
(a) if the only issue is whether an English or a foreign court is the more
appropriateforumforthetrialoftheaction,thatquestionshouldnormally be decided by
the foreign court on the principle of forum non conveniens, and the English court
should not seek to interfere with that decision;
(b) however, if, exceptionally, the English court concludes that the pursuit of the
action in the foreign court would be vexatious and oppressive and that the English
court is the natural forum, that is, the more appropriate forum for the trial of the
action, it can properly grant an injunction preventing the plaintiff from pursuing his
action in the foreign court;
(c) in deciding whether the action in the foreign court is vexatious and
oppressive,accountmustbetakenofthepossibleinjusticetothedefendant if the
injunction is not granted, and the possible injustice to the plaintiff if it is. In other
words, the English court must seek to strike a balance.
The above test indicates that an injunction would not be granted unless England is the
natural and more appropriate forum for the trial of the action. A question arises, however,
as to whether the English courts can also grant an injunction even when the dispute is not
connected with England, but rather with another country. This matter was examined in
detail by the House of Lords in the recent case of Airbus Industrie GIE v Patel40. The case
concerned an aircraft, owned by Indian Airlines, which crashed in 1990 as it was about to
land at Bangalore Airport. The defendants to the English proceedings were English
40
(1998) 2AllER 257

23
passengers who were injured or killed in the air crash. The aircraft was manufactured by
Airbus Industrie in France. Indian Airlines was a domestic airline, which did not fly
internationally. After the crash, a public inquiry, carried out in India, concluded that the
crash was caused by the pilot’s fault. The defendants sued the airline and airport company
in India. They also brought an action in Texas against a large number of parties who might
have had some connection with certain aspects of the aircraft or its operation, including
Airbus Industrie. The latter challenged the jurisdiction of the Texas court on the ground,
inter alia, that the US Foreign Sovereign Immunity Act entitled corporations which were
more than 50% government owned to claim sovereign immunity. The district court
upheld this objection and the defendants appealed. Meanwhile, Airbus obtained a
declaration in the Bangalore City civil court that the defendants were not entitled to
proceed in any court other than Bangalore. Airbus then applied to the English court for an
injunction restraining the defendants from pursuing their appeal in Texas, on the ground
that those proceedings were vexatious and oppressive.
Hence, the prime and crucial question before the court was whether the English court
would grant an injunction in circumstances where there was no relevant connection
between the English jurisdiction and the proceedings in question other than that the
defendants, who were resident in England, were subject to the jurisdiction and, thus, could
effectively be restrained by such an injunction.
Anti-suit Injunctions
The power to restrain the party (or potential party) to the foreign proceedings is a power
to grant what is called an anti-suit injunction. Such injunctions are, in a strict sense the
creation of equity rather than common law. However, they are a feature of the Common
Law in the wider and more important sense that, as I have said, they are virtually
unknown outside Common Law countries. I mention the fact that in a Common Law
country an injunction is a form of equitable rather than (in the narrow sense) common law
relief, not in order to create terminological confusion, but in order to emphasise that, in
accord with the fundamental distinction between common law and equitable remedies,
the availability of the latter is in large measure discretionary. In any country a defendant
(actual or potential) when faced, perhaps unexpectedly, with foreign proceedings (current
or anticipated) will often have several options open to him. He may decide to defend the
action; he may decide simply to ignore it; he may in some circumstances launch counter-
proceedings elsewhere. Sometimes there may also be various other procedural
possibilities which fall short of recourse to anything so apparently draconian as the anti-
suit injunction.
Anti-suit injunctions are also available where there has been no breach of an arbitration or
jurisdiction agreement. However, in such cases the person applying for the injunction
must show that the foreign proceedings are "unconscionable" or "vexatious and
oppressive". These are very broad terms but would include situations where a party tried
to re-litigate a matter that had already been tried, or commenced proceedings in bad faith
solely for the purpose of oppressing another party.

24
An injunction is an exceptional remedy in English law. However, the English courts have
generally taken the view that the remedy is justified in the case of wrongful proceedings
since damages will be neither adequate nor appropriate to compensate for the wrong.
Further points to consider if applying for an anti-suit injunction
The power to grant an anti-suit injunction is entirely within the court's discretion. This
means that the judge can take into account any relevant factors. An important
consideration is delay. In Toepfer v Molino Boschi (1996) a dispute arose out of the sale
of soya meal incorporating a London arbitration clause. The buyers made a claim in the
Italian courts and sellers disputed the court's jurisdiction, but it was only seven years later
that they applied in London for an anti-suit injunction. The court decided that the sellers
had left it too long.
The existence of other proceedings and other parties may also be reasons for refusing to
grant an injunction. In Bouygues v Caspian Shipping (1998) the Court of Appeal refused
to maintain an injunction restraining South African proceedings, even though the
proceedings were in breach of an exclusive jurisdiction clause. The main factor influencing
the decision was that very similar proceedings would continue in South Africa in any event
involving two other parties and the injunction would not ensure that all related disputes
would be resolved before a single tribunal.
If the foreign proceedings are already in progress, it will usually be prudent to challenge
the court's jurisdiction in that court, typically asking the foreign court to decline
jurisdiction on grounds of the presence of an arbitration or jurisdiction clause. However, it
is not necessary to make such a challenge in the foreign court before applying for an
injunction. Indeed, in The Angelic Grace, the Court of Appeal suggested that it might be
preferable to ask for an injunction before the foreign court has ruled on its jurisdiction.
An important limitation on the court's power is that it will not grant an anti-suit injunction
unless the defendant is subject to the jurisdiction of the English courts. This will usually be
satisfied by establishing that there is a London arbitration or jurisdiction clause or that the
contract is governed by English law. In addition, the defendant must be "amenable" to the
court's jurisdiction. The precise meaning of this is unclear but in practice it means that the
injunction must be enforceable against the defendant.

Examples of a case involving an anti-suit injunction is as follows:

Case 1
In proceedings to set aside an anti-suit injunction, , the English High Court in U&M Mining
Zambia Ltd v Konkola Copper Mines plc [2013] EWHC 260 (Comm), 15 February 2013
has held that the English courts do not have exclusive jurisdiction to grant interim
measures in support of arbitrations seated in England, and that, in the circumstances, the
High Court of Zambia was the appropriate forum to grant such measures.
U&M Mining Zambia Ltd (U&M), a Zambian subsidiary of a Brazilian company, operated a

25
mine for Konkola Copper Mines plc (Konkola), the owner of the mine and a Zambian
subsidiary of UK-listed Vedanta Resources plc. The agreement between Konkola and U&M
was set out in various contracts, including a footwall and hanging wall agreement dated 15
December 2011 (the Agreement). The Agreement was governed by Zambian law, and
provided for disputes to be resolved by LCIA arbitration with the "place" of arbitration in
London. The Agreement also provided for the Zambian courts to have exclusive
jurisdiction.
Konkola terminated the Agreement on 28 January 2013 on the grounds that U&M had
failed to meet certain production targets. On 31 January 2013, Konkola obtained an ex
parte interim order from the High Court of Zambia requiring U&M to vacate the mine
immediately and hand over certain equipment which, according to Konkola, had been
pledged to it as security. U&M commenced LCIA arbitration in London on the same day. On
1 February 2013, U&M made a without notice application to the English High Court and
obtained an anti-suit injunction restraining Konkola from taking any further steps in the
Zambian courts.
Seat
Mr Justice Blair held that the "place" of arbitration identified in a contract was to be
treated as the seat of arbitration unless there was clear evidence to the contrary. There
being no such evidence, the seat of the arbitration was England. The clause in the
Agreement that the Zambian courts had exclusive jurisdiction was interpreted as an
agreement that Zambian courts had exclusive jurisdiction over the enforcement of any
award in Zambia.
Whether the English courts had exclusive jurisdiction to grant interim remedies
Blair J referred to another High Court judgment, Econet Wireless Ltd v Vee Networks Ltd
[2006] EWHC 1568 (Comm), where it was stated that "The natural court for granting
interim measures must be the court of the country of the seat of the arbitration, especially
where the curial law of the arbitration is that of the same country". However, Blair J added
that a party may exceptionally be entitled to seek interim measures in other courts. He
concluded that the correct position was summarised at Dicey, Morris & Collins' The
Conflict of Laws (15th ed) paragraph 16-036, that "the courts of the seat will have the sole
supervisory and primary supportive functions in relation to the conduct of the
arbitration" (emphasis added). Thus, the English courts do not have exclusive jurisdiction
to grant interim measures in support of arbitrations seated in London.
This conclusion was strengthened by Rule 25.3 of the LCIA Arbitration Rules, which allows
a party to apply to "any state court" before the formation of the tribunal. Given that the
mine and the parties were located in Zambia and that the mine was of national importance
to Zambia due to its contribution to Zambia's GDP, Blair J found that the Zambian courts
were the appropriate forum for such proceedings. The anti-suit injunction was set aside.
Comment
This is the first authority to confirm the position, long assumed by the arbitration

26
community, that the English courts do not have exclusive jurisdiction to grant interim
measures in support of arbitrations seated in England. As demonstrated by this case, there
will always be circumstances where it is most effective to seek interim relief from the local
courts, particularly given the difficulties with enforcing an interim order of the English
courts abroad. Whether and in what circumstances interim relief from the local courts is
available will of course depend on the arbitration agreement in question and the
availability of interim relief under local law.

Case 2
NIGEL PETER ALBON (T/A N A CARRIAGE CO) v (1) NAZA MOTOR TRADING SDN BHD
(A company incorporated with limited liability in Malaysia) (2) TAN SRI DATO
NASIMUDDIN AMIN [2007] EWHC 1879 (Ch). The Lawtel summary:
The applicant (Y) applied for an injunction restraining the respondent Malaysian company
(N) from pursuing arbitration proceedings in Malaysia. Y alleged that the underlying
agreement between the parties was an oral agreement made in England subject to English
law. N alleged that there was a joint venture agreement signed by the parties in Malaysia
governed by Malaysian law and containing a provision for arbitration in Malaysia. N
denied concluding the English agreement as alleged by Y. Y contended that his signature
on the joint venture agreement had been forged. Y had obtained permission to serve the
proceedings out of the jurisdiction and an order for alternative service. N had applied
unsuccessfully for a stay of proceedings in favour of arbitration proceedings in Malaysia,
the court holding that the issue of the authenticity of the joint venture agreement should
be determined by the English court rather than in the arbitration proceedings. Y had
obtained on an application without notice an order restraining N from pursuing the
arbitration proceedings in Malaysia but that injunction had been discharged as the
sanction for failure by Y to comply with a court order. Y then made a further application
for an injunction. Y contended that the court had jurisdiction to grant an anti-suit
injunction and should grant an injunction barring N from taking any further steps in the
arbitration proceedings pending the outcome of the English proceedings. N contended
that the relief should be limited to barring N from inviting the arbitrators to rule on the
authenticity of the joint venture agreement but should leave it to the arbitrators to decide
whether to proceed with the arbitration in the interim without prejudice and subject to
any determination by the English court on the issue of authenticity and accordingly of the
arbitrators’ jurisdiction.
Lightman J. held that the grant of an anti-suit injunction in connection with a contract
governed by English law was a claim made in respect of the latter contract within CPR
r.6.20(5)(c), Youell v Kara Mara Shipping Co Ltd (2000) 2 Lloyd’s Rep 102 applied. If that
was wrong, the court had jurisdiction to grant an anti-suit injunction on the basis of N’s
application for a stay, Glencore International AG v Metro Trading International Inc (No3)
(2002) EWCA Civ 528, (2002) 2 All ER (Comm) 1 considered. N was a foreign party
brought into the jurisdiction by answering a claim within CPR r.6.20: it had not willingly

27
submitted to the jurisdiction without reservation and it had not brought a counterclaim.
But it had applied for a stay, and that application was ongoing and required the court to
adjudicate on the authenticity of the joint venture agreement.
In those circumstances, the court had power to protect its processes in the course of and
for the purposes of determining the claim to the stay, and that included where necessary
the power to grant an injunction restraining N from taking steps within or outside the
jurisdiction which were unconscionable and which might imperil the just and effective
determination of the claim to the stay, Grupo Torras SA v Al-Sabah (No1) (1995) 1 Lloyd’s
Rep 374 considered. The pleaded claim to an injunction fell within the gateway relied on
and the necessary permission was granted to serve the amended claim form and amended
particulars of claim in Malaysia. (2) The injunction sought was necessary to protect the
interests of Y in the instant proceedings. For N to prosecute the arbitration proceedings or
to allow the arbitrators to proceed with them pending determination whether N had
forged Y’s signature on the joint venture agreement was to duplicate the instant
proceedings. That was oppressive and unconscionable, Tonicstar Ltd (t/a Lloyds Syndicate
1861) v American Home Assurance Co (2004) EWHC 1234 (Comm), (2005) Lloyd’s Rep IR
32 considered. Both sets of proceedings would be concerned with exactly the same
subject-matter, Elektrim SA v Vivendi Universal SA (2007) EWHC 571 (Comm), (2007) 2
Lloyd’s Rep 8 considered. The court declined to frame the injunction so as to leave it open
to N to proceed with the arbitration inviting the arbitrators to determine what, if any,
steps to take in the interim and without prejudice to the determination of authenticity by
the English court.

_______________________________
Questions to be considered under this topic:
1. An English court is said to have jurisdiction to hear a case involving a foreign
national who as a defendant, submits to its jurisdiction. However common law
rules in conflict of laws allow a plaintiff to ‘forum shop’ in certain instances.
(a) Discuss ways that a defendant is said to have submitted to the jurisdiction of
the court.
(b) Discuss instances where the defendant may apply for a stay of proceedings on
the grounds of the doctrine of forum non conveniens.
(c) What is the application of the rules; lis alibi pendens and anit-suit injunctions.

Topic 3: The Domicile- Lex Domicilii 6 hours

28
Domicile is a connecting factor which links a person with a particular legal system, and the
law of his domicile is his personal law. That law determines, in principle, whether a man
or woman has legal capacity to marry, and how the estate of a deceased person is to be
distributed. If a married person is domiciled in England, the English courts have
jurisdiction to dissolve or annul his or her marriage. If a married person is domiciled in,
say, France, then a divorce decree granted by the French courts to or against that person
will be recognised in England.
Apart from the conflict of laws itself, domicile is of significance in other areas of the law.

Since it is a connecting factor, a person’s domicile must be ascertained by applying English

law, and not in accordance with the rules of a foreign legal system. The general meaning of
domicile is ‘permanent home’. This seems clear enough, but the view expressed by Lord
Cranworth V-C in Whicker v. Hume (1858) that a person’s domicile is what he regards as
his permanent home is far too simplistic and, indeed, somewhat misleading.

It is true that for most people their domicile coincides with their permanent home.
However, domicile is a legal concept and a person’s ‘basic’ domicile is his domicile of
origin, which is ascribed to him by law at his birth, and is not necessarily the country
of his family’s permanent home at that time. His domicile of dependence, whilst he is a
minor, is the same as that of both or one of his parents, even though he may have no home
with either. The ascertainment of a person’s domicile of choice does depend upon showing
that he intended to establish a permanent home in a particular country, but even so, what
the law regards as permanent may not strike a layman as such. There are three kinds of
domicile: domicile of origin, domicile of choice and domicile of dependence.

Domicile of origin
A person’s domicile of origin depends on the domicile of one of his parents at the time of
his birth, not on where he was born, nor on his parents’ residence at that time. In Udny v.
Udny41, for example, Colonel Udny was born and then lived in Tuscany (Italy), where his
father resided as British consul. But his father was domiciled in Scotland, so the Colonel’s
own domicile of origin was Scotland.

The rules for the ascertainment of the domicile of origin are: (i) a legitimate child takes his
father’s domicile, (ii) an illegitimate child and (iii) (possibly) a posthumous child, that is a
legitimate child born after his father’s death, both take his mother’s domicile, and (iv) a
foundling or one whose parents’ domicile is unknown is domiciled in the place where he
is found or born. In one situation only, (v) the domicile of an adopted child, the domicile of
origin can be changed after the child’s birth. By statute, an adopted child becomes
thenceforth for all legal purposes the child of his adoptive parents, so he takes their
domicile as
his domicile of origin. A minor’s domicile may change after his birth, but any new domicile
he acquires is a domicile of dependence and not of origin (except where he is adopted);
41
(1869) 1 LR Sc & Div 441

29
that remains the domicile he acquired at birth 42.

Domicile of choice
Differences between domicile of origin and domicile of choice
Domicile of origin and domicile of choice can be distinguished in three ways: First, the
domicile of origin is ascribed to a person by law and does not depend on his own acts or
intentions; a domicile of choice is acquired if a person goes to live in a country with the
intention to remain there permanently. Secondly, it is more tenacious than a domicile of
choice. A domicile of origin can only be lost by intentional acquisition of another one, but a
domicile of choice can be lost simply by leaving the relevant country intending not to
return. If that should happen, then, unless another domicile of choice is acquired, the
domicile
of origin revives. This, the ‘revival’ of the domicile of origin, is a third distinguishing
feature. It was established by Udny v. Udny in 1869. Colonel Udny was born in Tuscany,
Italy where his father, then domiciled in Scotland, was British consul. Thus Scotland was
his domicile of origin. He later acquired a domicile of choice in England, but then fled to
France to evade his creditors. He thereby abandoned his English domicile, but did not
acquire one in France. The House of Lords held that when the Colonel left England, his
Scottish domicile of origin automatically revived; he did not need to go and live in
Scotland in order to reacquire it.

Requirements for acquisition

A domicile of choice is acquired by a combination of two things, the factum of actual
presence or residence in a country, and the animus, that is, the requisite intention.
The two must coincide43. If a person goes to a country and then leaves it, but later wishes
to return there for good without actually returning, he will not acquire a domicile in that
country. However, provided the necessary intention exists, even a stay of a few hours will
suffice.

The chief problems in this area concern the definition of the requisite intention and the
proof of its existence in the particular case. The requisite intention may be defined as that
of permanent or indefinite residence; the person must intend, at the relevant time, to stay
in a country for good, or at least for an unlimited period 44. If he does so, it does not matter
that he later changes his mind, so long as he does not actually leave the country. If,
however, he intends to reside in a country for a fixed time, say five years, or for an
indefinite time, but thinks that he will leave some day, then he does not acquire a domicile
of choice there. If the possibility of departing is in his mind, however, that possibility must
depend upon a real contingency and not a fanciful one (such as if he won the football
pools), nor one which is too vague. For example, compare IRC v. Bullock45 with Re Furse.
42
J.G. Collier, Conflict of Laws, 3rd ed pg 39
43
As in the celebrated American case of White v. Tennant (1888) 31 W Va. 790.
44
See Re Fuld (No. 3) [1968] P 675. For a case where the requisite intention was not
proved see Re Clore (No. 2) [1984] STC 609.
45
(1976) 1 WLR 1178

30
In the former case, Group Captain Bullock, a Canadian, lived in England for forty-four
years. He had married an Englishwoman and in deference to her wishes set up home in
England. He often expressed an intention to return to Nova Scotia, Canada should she
predecease him. The Court of Appeal held that he had not acquired a domicile in
England. Group Captain Bullock’s intention indeed depended upon a contingency
which might not occur, but it was quite possible that it would, for it was nearly as likely
that his wife would predecease him as that he would predecease her.

But in Re Furse46 an American, who owned a farm in England where he lived and
worked and had his family after 1923, had considered returning to New York from
time to time but after the 1940s had abandoned searches for a house in the United
States. Thereafter he stayed on his farm and said nothing except that he might go back to
the United States if he ceased to be capable of leading an active life on the farm. It was
held that he had acquired a domicile of choice in England, since his intention to
leave was vague and indefinite. There was no pressure on him to stay here, and he was
wholly integrated into the community in which he lived.

Physical residence and the requisite intention must coincide at the relevant time. If they
do not, it is immaterial that the intention can be shown to have been formulated at some
subsequent time. In the well-known case of Bell v. Kennedy47 Mr Bell left Jamaica, his
domicile of origin, as he said, ‘for good’, and went to Scotland intending to reside
there. But when he arrived he could not make his mind up as between Scotland and
England, though he remained in Scotland. His wife died. It was held that at that time his,
and his wife’s, domicile was still in Jamaica. Shortly afterwards he bought an estate in
Scotland and settled there, but it was only then that he acquired a domicile of choice in
Scotland.

Burden and standard of proof

The burden of proving the acquisition of a domicile of choice rests on the person who
alleges it. It seems that the standard of proof is that required in ordinary civil cases, that is,
proof upon a balance of probabilities, though there is some doubt about this. Some cases
concerning rather unusual people are often cited in order to show that the burden of proof
is extraordinarily difficult to discharge. Thus, in Ramsay v. Liverpool Royal Infirmary48
George Bowie, a Scotsman born in Glasgow with a Scottish domicile of origin, stopped
working when he was thirty-seven and when he was forty-six went to Liverpool to live
with (or sponge off ) members of his family. He died there aged eighty-seven. He had only
left Liverpool on two short trips, and refused to return to Glasgow, even for his mother’s
funeral. He always took a Glasgow newspaper, and called himself a ‘Glasgow man’, stating
this in his will. He made a will which was formally invalid under English law, but valid by
Scots law. The House of Lords held that he died domiciled in Scotland. Though his
residence in England was lengthy, it was ‘colourless’ and motivated only by his
46
(1980) 3 AllER 838 CA
47
(1868) LR 1 Sc & Div 307
48
(1930) AC 588

31
attachment to a member of his family who would keep him despite his
disinclination to work. The burden of proving his acquisition of a domicile in England
had not been discharged. His will was thereby held to be valid.
In Winans v. Attorney-General49, An American, whose domicile of origin was in New
Jersey, came to England and took tenancies of furnished houses in Brighton, one of which
he kept until his death there thirty-seven years later. He spent parts of each year in
England, Germany, Scotland and Russia, but during the last four years of his life, he
confined himself to Brighton on medical advice. His two abiding preoccupations were
looking after his health and a project which never came to fruition of building ‘cigar’ or
‘spindle’ shaped vessels for sale to the United States in order to wrest the carrying trade
from the British. He acquired part of a waterfront in Baltimore to build the ships and
talked of returning there to develop the scheme. He disliked the English and never mixed
with them socially. The House of Lords held that he did not die domiciled in England;
the Crown had not adduced sufficient evidence of any fixed and determined purpose
positively to acquire a domicile of choice in England, and had
not discharged the burden of proof incumbent upon it.

Evidence of intention

Any evidence may be relevant to prove the intention. No piece of evidence is necessarily
decisive, and evidence which is decisive in one case may be entirely discounted in another.
Declarations of the person concerned are viewed warily. For one thing, they may be self-
serving.
Further, though they are admissible in evidence, they must be scrutinised carefully to
ascertain the person to whom, the purpose for which and the circumstances in which they
are made.

The declaration must be consistent with the person’s other behaviour, and must, in any
case, be put into effect by conduct. In Ross v. Ross50 the question was whether a Scotsman
who had no fixed home was domiciled in New York. He told his business associates that he
intended
to remain there. But he always referred to Scotland as ‘home’, and in an affidavit he swore
he was a domiciled Scotsman. The House of Lords held that the statements to his
associates were admissible in evidence, but since they were not consistent with the
rest of it, a New York domicile was not established.

Domicile as a social bond

Domicile denotes a social, not a political, attachment to a particular country. This is shown
by cases which concerned persons who became naturalised in a state or persons who

49
(1904) AC 287
50
(1930) AC 1 HL

32
were deported or were subject to possible deportation. If a person becomes naturalised in
a country this may be evidence of his intention to acquire a domicile there but it may not
necessarily be so. He may want to become a national of one state without wishing
altogether to sever his social ties with the country of his domicile. An alien who is liable to
be deported from England, and whose stay here may, therefore, be cut short, may
nevertheless intend to stay in England and make it his permanent home so far as he is able
to do so. In Boldrini v. Boldrini51, for example, an Italian who was working as a waiter
in England was registered as an alien under the then aliens
legislation and was liable to deportation. He was nevertheless held to have acquired
a domicile here. The same was true of an alien in respect of whom a deportation order
had been made.
However, an illegal entrant to England cannot acquire a domicile there. This is a rule based
on English public policy; an English court might well hold that an illegal entrant to another
country had obtained a domicile there.

Motive and freedom of choice

Motive must be distinguished from intention. The fact that a person has what might be
regarded as an unworthy motive in going to a country, for example, to escape payment of
taxes, does not prevent the court from holding that he has formed the necessary intention
to reside permanently there. Generally speaking a person’s intention must be the
result of a free choice; but all that this means is that the fact that, for instance, his
residence is a result of his fleeing from justice or from oppression or enemy invasion, may
make it perhaps less likely that he has the requisite intention, but if there is adequate
evidence of such an intention, there is nothing to stop the court holding that he has
acquired a domicile of choice.

A person who is sent to a country for employment there usually does not acquire a
domicile there, but he may do so. A serviceman posted to another country for service will
not usually acquire a domicile there, but again he may do so. In Donaldson v. Donaldson52
an RAF (Royal Air Force) officer stationed in Florida decided to stay there after
demobilisation, and brought his wife and child there; it was held that he had acquired a
domicile in Florida. In the converse case of Stone v. Stone53, a United States serviceman
was held to have acquired a domicile in England, where he had been posted.

Abandonment of domicile of choice (or dependence)

In order to abandon a domicile of choice, the requisite intention to do so must be carried

into effect and the person must actually leave the country of his domicile of choice. If he

51
(1932) P 9 CA
52
(1949) P 363
53
(1958) 1 WLR 1287

33
does not, that domicile continues to adhere whatever his wishes. In in b. Raffenel54, a
widow who had a domicile of dependence with her husband in France went on board a
cross-channel ferry at Calais intending to sail to England, her domicile of origin, and stay
here. Before the ship left France, she fell ill and had to return to land where she died. She
died domiciled in France.
Provided, however, he has actually physically left, the person need not have formed a
positive determination never to return; he has lost the domicile of choice merely by having
no intention to go back to the country.
If no other domicile of choice is acquired, the domicile of origin revives. Thus, had Mrs
Raffenel’s boat crossed the boundary of French territorial waters, she would have died
domiciled in England.

Exceptions to acquisition of domicile of choice

1. Refugees: It is sometimes argued that there is a presumption against a change of
domicile. If in times of war the refugee has not abandoned the possibility of
returning home, then no new domicile will be acquired. See: Re Lloyd Evans
(1947) Ch 695. But in cases where it is clearly impossible to return home and the
refugee intends to stay in the new country then a new domicile is acquired.
See:May v May (1943) 2 AllER 146, where a Jewish refugee from nazi Germany
fled to the United States with no intention of returning. Also see: Mandal v Mandal
(1956) 1 LR Punj 215 where 2 Austrian domiciled person married in Vienna in
1936. In 1939 on the invasion of Austria by nazi Germany, they fled to India. Since
they lived in India and had no intention of returning to Austria, a full bench of the
Punjab High Court held that they had acquired a domicile of choice there.
2. Fugitives: A fugitive from justice may acquire a domicile of choice if it is clear that
he intends to establish links with his/her new country. In the case of Re Martin
(1900) P 211 Lindley LJ suggested that the all important factor is whether there is
a definite period after which a wrongdoer may return home in safety. If the crime
ceases to be punishable or the sentence enforceable after a given number of years,
residence in another country, unless fortified by other facts, does not affect a
change of domicile, but if the fugitive remains perpetually liable to proceedings
then the new place of residence becomes the new domicile.
3. Invalids: Where a person with poor health seeks of his own free will to live abroad
for the good of his health then he acquires a new domicile but not if the medical
attention required is short term. See: Moorhouse v Lord (1863) 10 HL Cas 272
and Hoskins v Matthews (1856) 8 De GM & G 13 where a 60 year old English
domiciled person had an injury in his spine and he went to Florence (Italy)
solely because he thought the warmer climate of Italy might benefit his
health. The Court held that he was domiciled in Florence as “in settling there he
was exercising his preference and not acting upon necessity”.
4. Prisoners: The prisoner will continue to retain the domicile that he/she possessed
54
(1863) 3 Sw & Tr 49

34
 before his/her imprisonment. See: The Late Emperor Napoleon Bonaparte
(1853) 2 Rob Eccl 606
5. Public Servants: The 19th century view was that service personnel or diplomats
would not normally acquire a new domicile because their residence abroad was
linked to national duties. But in recent times, it is a question of nature and decree
that a soldier may acquire domicile abroad as well as intent. In the case of Stone v
Stone (1959) 1 AllER 194 a member of the US Armed Forces was stationed in
Europe. He used to spend all his holidays in England and wanted to settle
there on retirement from his post. The court held that he acquired a domicile
of choice of England.

Domicile of dependence
Married women
Until 1 January 1974, as a matter of law, a married woman automatically possessed the
domicile of her husband even if he and she lived apart and even though they were
judicially separated. Only if their marriage was void or after it had been annulled or
dissolved or after her husband’s death could she have her own domicile, separate from his.
However, by the Domicile and Matrimonial Proceedings Act 1973, from and after 1
January 1974, the domicile of a married woman is ascertained in the same way as is that of
an adult male. This rule applies to women who were married either before or after that
date. If, immediately before then, a woman was married and had her husband’s
domicile by dependence, she is to be regarded as retaining that domicile as her domicile of
choice, unless and until she acquires another domicile of choice or her domicile of origin
revives on or after 1 January 1974. It has been held that her previous domicile of
dependence must continue as a ‘deemed’ domicile of choice until she actually departs
from, say, England for another country.

Minors
A minor is a person who is aged under eighteen. The domicile of dependence of a
legitimate minor is, that of his father, and changes automatically if his father changes his
own domicile. That will also remain his domicile after his father’s death until the minor
becomes eighteen. It may, however, after his father’s death follow that of his mother. But if
his mother changes her domicile, the minor’s domicile does not necessarily alter.

The mother has a power to change the minor’s domicile along with her own, but
she must positively change it and must not abstain from doing so. If she does exercise this
power she must not, it seems, do so fraudulently, that is, for a purpose other than for the
benefit or welfare of the minor. Thus in the case of Re Beaumont55 Mr and Mrs B were
domiciled in Scotland. They had several children all of whom had a Scottish domicile of
origin and of dependence. The father died and Mrs B then married N. They went to live in
England where they acquired a domicile. They took all the children to live with them with
the exception of Catherine, who was left in Scotland with her aunt, with whom she had
55
(1893) 3 Ch 490 CA

35
lived since her father’s death. Catherine attained her majority and shortly thereafter died
in Scotland.
The Court of Appeal held that Catherine died domiciled in Scotland, since her mother had
not exercised her power to alter her domicile.

The domicile of origin of an illegitimate child is, as we have seen, that of his mother when
he is born.

If, as is thought, a legitimated child acquires a domicile of dependence upon his father
when he is legitimated, his domicile will thereafter be ascertained as if he were legitimate.
The same must be true of a child who is adopted by a man and wife, since he takes the
adoptive parents’ (presumably the father’s) domicile as his domicile of origin.

Mental patients

It appears that the domicile of a mentally disordered person cannot be changed by his own
act since he is unable to form the requisite intention56, and thus he retains the domicile he
had when he became insane. There is authority for the proposition that if a person
becomes insane during his minority his domicile of dependence can be changed by an
alteration of the domicile of the parent upon whom he is dependent, even if this takes
place after he attains majority, but that if he becomes insane after he attains majority, his
domicile cannot be changed for him.

DOMICILE OF CORPORATE ENTITIES

Companies
Status and domicile

The personal law of a company is that of its domicile, which means the law of the place of
its incorporation. To this it owes its existence, and that law governs also its dissolution
and its capacity to contract. The law of the place of incorporation dictates who can sue (or
cause it to sue) and be sued on its behalf, and governs the extent to which a member can
be personally liable for its debts. It also governs its status after an amalgamation.

In National Bank of Greece and Athens SA v. Metliss57 Sterling mortgage bonds governed by
English law were issued by a Greek bank in 1927 and guaranteed by the National Bank of
Greece, a Greek bank. In 1941 payment of interest on the bonds ceased. In 1949 the Greek
Government passed a moratorium extinguishing liability on the bonds. In 1953 another
Greek decree amalgamated the National Bank with the Bank of Athens into a new bank,
the National Bank of Greece and Athens, which the decree declared to be the
‘universal successor’ of the two banks. In 1955 a bondholder claimed arrears of interest
from the new bank.
56
Urquhart v Butterfield (1887) 37 ChD 357 CA
57
(1958) AC 509 CA

36
The House of Lords held that he could do so, since the status of the new bank and
the effects thereof were governed by Greek law. The moratorium law was said not
to have affected the old bank’s liability since that was a matter for the proper law of
the contract, English law.
Subsequently, a decree provided that this status should not carry with it liability under the
bonds. But the House of Lords held that this affected the obligations thereunder, and since
these were governed by English law the new Greek decree was irrelevant. (It was also said
that if it had affected status, it would be disregarded in so far as it was meant to have
retrospective effect.)

Residence

The residence of a company, which is chiefly important for tax purposes, is determined not
by the place of its incorporation, but by where its ‘central management and control’ is
exercised.

Thus in De Beers Consolidated Mines v. Howe58 A diamond company was incorporated in

South Africa and had a head office there. A board of directors there handled day-to-day
administrative matters. Another board in London, which joined with that in South Africa
in making major policy decisions, in fact controlled them because most of the directors
lived in London. Meetings of members and mining operations and sales of diamonds took
place in South Africa.
The House of Lords held that the company should be assessed for tax as resident in
the United Kingdom, since the central management and control was actually
exercised there, where it ‘kept house and did business’.

In Egyptian Delta Land & Investment Co. v. Todd59, where the company simply
maintained in England an office, a register of members and a local secretary to comply
with minimum legal requirements, but its active secretary, directors, seals, books and
bank account were all in Cairo, it was held to be resident in Egypt. It is, for this purpose,
irrelevant where the central management and control should be exercised under the
company’s constitution, if it is, in fact, exercised elsewhere, as in the case of foreign
subsidiaries who were held to be resident in England since they were wholly controlled by
their English holding company.

Nationality of a company is determined by the law of the place of incorporation. See

Barcelona Traction Power & Light Co. Case, ICJ (1970).

Questions to consider under this topic:

1. The traditional common law concept of domicile puts an emphasis on a person’s

permanent home as being a factor connecting an individual or corporation to a
particular legal system.

58
(1906) AC 455 HL
59
(1929) AC 1 HL

37
 (a) How has lex domicilii been applied as a test to ascertain the validity of a
marriage with a foreign element under the essential validity doctrine?
(b) What domicile would the English courts ascribe to a refugee who has no hope of
returning to his home country, a married woman, a prisoner held in
Guantanamo bay, a child under the care of its grandmother and a medical
practitioner from DRC who decides to make Zambia his permanent home?

2. The domicile- lex domicilii is a connecting factor which links a person with a
particular legal system and connotes the person’s “permanent home”.
(a) What are the requirements at common law for an individual to acquire a
domicile of choice? And how do these contrast with the facts in the case of
Ramsay v Liverpool Royal Infirmary (1930) AC 588?
(b) What factors do the courts consider to determine the domicile of a corporate
entity?

Topic 4 CHOICE OF LAW IN CONTRACT- LEX LOCI CONTRACTUS 3 hours

The choice of law in international contracts is a central issue of the conflict of laws or
private international law. In contracts, the basic concept of the proper law of the contract
has over the years built up a considerable amount of case law-in deciding which law
governed most contractual issues. However as regards some contractual issues such as the
effect of mistake, misrepresentation and illegality, and capacity to contract, there was
either no or rather obscure case law.
The 19th century position was expressed with characteristic candour by Jessel MR in
Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462 when he
observed:
…if there is one thing more than another which public policy requires, it is that men
of full age and competent understanding shall have the utmost liberty in contracting, and
that their contracts, when entered into freely and voluntarily, shall be held sacred and
shall be enforced by Courts of Justice.

Thus English law leaves business parties largely free to determine the content of their
contracts. Wise contracting parties will make provision for as many contingencies as they
can forsee in order to minimise the disruption of the operation of the agreement and they
can, if they wish, produce their own set of rules to deal with those contingencies and to
dispose of any disputes that may arise between them.
Where a contract is truly international among other matters which prudent contractors
should bear in mind are the location of, and the law to be applied in any litigation. As an
ordinary part of the agreement a term can specify where any dispute is to be brought.
Such a term, known as a jurisdiction clause or choice of law clause, can provide that all

38
disputes shall be litigated in the courts of a particular system and English courts are
frequently chosen even by contractors who have no connection with England 60.

At common law, the judges developed a number of rules to determine the law to be
applied to an international contract. The common law rules in private international law
centered on the proper law of the contract, which was the law chosen by the parties or, in
default of choice, the legal system with which the contract had the closest and most real
connection. (See: Mann, FA (1991) 107 LQR 353). This was set out in the speeches of
Lords Diplock and Wilberforce in the leading case: Amin Rasheed Shipping Corp v
Kuwait Insurance Co (1984) AC 50 HL which concerned a contract contained with an
insurance company. The former judge said, “The first step is to examine the policy to see
whether the parties have by its express terms, or by necessary implication evinced
(demonstrated) a common intention as to the system of law by reference to which their
mutual rights and obligation under it are to be ascertained”. Lord Wilberforce added that
if no intention is expressed and none can be inferred then, “it is necessary to seek the
system of law with which the contract has its closest and most real connection”. This is the
imputed applicable law.

Express choice of law

At common law it was recognised from the 18th century that parties might expressly select
the law to govern a particular dispute. Such a degree of freedom was consistent with the
theory that contractual obligations were founded upon agreement and that the courts
should have recognised the intention of the parties as manifested by the terms of the
contract. The principal question that arose was whether there were any limits to the
parties freedom of choice.
The matter fell to be determined in the case of Vita Food Products Inc v Unus Shipping
Co Ltd (1939) AC 277 where the salient facts were as follows:
By Newfoundland (Canada) law, all bills of lading were required expressly to
incorporate the Hague Rules.
A cargo of herrings (fish) was sent from Nova Scotia (Canada) to New York (USA). The bill
of lading did not incorporate the local law but merely stated that the bill was to be
governed by English law. Both the Rules and the bills of lading provided for exclusion
clauses in favour of the ship owner. The ship and its cargo were damaged off Nova Scotia.
The consignees of the herrings brought an action against the ship owners.

The Privy Council held that the action of the consignees failed by virtue not of exclusions
under the Hague Rules, but by reason of the terms of the bill of lading. In dealing with the
argument that there were limits upon parties to select the governing law, Lord Wright
began by noting that the proper law of the contract is “the law which the parties
intended to apply”. He then observed:
…where the English rule that intention is the test, applies and where there is an
express statement by the parties of their intention to select the law of the contract, it is
difficult to see what qualifications are possible, provided the intention expressed is bona
fide and legal, and provided there is no reason for avoiding the choice on the ground of

60
John O’Brian, Conflict of Laws 4th ed pg 308

39
public policy.

The courts therefore would respect an express selection that was bona fide and legal,
although there were dicta in the cases that indicated that a legal system unconnected with
the contract would save for the choice of law clause, might be subject to close judicial
scrutiny61.

Moreover in accordance with the normal domestic rule as to certainty of contractual

terms, there was some authority for the assertion that an express selection clause that was
vague might be regarded as meaningless and incapable of enforcement.
An example of this approach is illustrated in the Court of Appeal judgment in the case of
Compagnie d’Armement Maritime SA v Compagnie Tunisienne de Navigation SA 62
where the facts were as follows: French ship owners contracted with a Tunisian company
for the shipment of oil from one Tunisian port to another. Under the contract clause 13
declared that the contract was to be governed ‘by the laws of the flag of the vessel carrying
the goods’ (several vessels and several flags were involved). Under clause 18 parties were
required to settle their disputes in London.

By a majority, the House of Lords concluded that clause 13 was not meaningless and could
be interpreted as a reference to French Law, and they further held that if clause 13 had
been inapplicable, the arbitration clause would not have been decisive. Lord Diplock
considered that the implication arising from an arbitration clause might be rebutted by
other indications of intention, while Lord Wilberforce noted that such a clause ‘must be
considered as an indication and be considered together with the rest of the contract and
relevant surrounding facts. The clause was regarded as too vague when the parties
contemplated that more than one vessel would be used.

Implied choice of law

Where there is no express selection of the proper law, the courts were prepared to infer
that there had been an implied choice of law by reason of the presence of particular
contractual terms. In the case of Jacobs v Credit Lyonnais63 Bowen, LJ observed that the
process was one of ‘applying sound ideas of business, convenience and sense’. Thus a
clause indicating that disputes were to be submitted to the courts of, or arbitration, in a
particular country in the case of Hamlyn v Talisker Distillery (1894) AC 202 was
considered to represent an implied choice of law the rationale being the principle ‘qui
elegit iudicium, elegit ius.’
This approach was highlighted in the case of Tzortzis v Monark Line A/B64 where
although all indication pointed to the law of Sweden, the Court of Appeal considered that
the choice of English arbitration raised a conclusive inference in favour of English law.

Apart from choice of jurisdiction and arbitration clauses, the courts have been prepared to
infer the intention of the parties from the language of the contract as it was in the case of
The Leon XIII (1883) 8 PD 121 or the style of the document; Rossano v Manufacturer’s
61
Boissevain v Weil (1949) 1 KB 482
62
(1969) 3 AllER 589
63
(1884) 12 QBD 589
64
(1968) 1 AllER 949

40
Life Insurance Co (1963) 2 QB 352. In some instances the Courts have paid regard to the
nationality of the parties as in Re Missouri Steamship Co (1889) 42 ChD 32 and the
residence of the parties.

Closest and Most Real Connection

In those cases where the evidence was not sufficient for the court to determine that there
had been an express or implied choice of law, it was necessary to determine the governing
law by identifying the system of law that had the closest and most real connection with the
transaction.
This was discussed in the case of The Assunzione (1954) P 150 where the facts were as
follows: an Italian vessel had been chartered by French ship owners for the carriage of
wheat. The charter party was concluded in Paris, but written in both French and English.
The bills of lading were written in French. Freight and demurrage were payable in Italian
currency in Italy. The ship flew the Italian flag and the bills of lading were endorsed to
consignees in Italy. In an action by the charters against the shipowners for damage to the
cargo, the Court of Appeal was required to determine whether French law or Italian laws
was to be applied.
The Court found no particular factor to be decisive, but concluded that the payment of
freight and demurrage in Italian tilted the balance in favour of Italian law. Singleton, LJ
expressed the principle thus: ‘One must look at all the circumstances and seek to
find what just and reasonable persons ought to have intended if they had thought
about the matter at the time when they made the contract’.

In attempting the task of determining the governing law of a contract, the court was
required to review and weigh a number of factors including the place of performance and
the residence of the parties. In performing this task, some difference of opinion existed as
to whether the court was seeking to determine what the intention of the parties would
have been had they considered the matter or merely what they ought to have intended:
Bonython v Commonwealth of Australia (1951) AC 201.

A third approach was advanced by Lord Denning, MR in the case of Coast Lines Ltd v
Hudig and Veder Chartering NV (1972) 2 Qb 34 when he argued that determination
was not based on any presumed intention, the learned judge observed that:
the determination “is not dependant on the intention of the parties. They
never thought about it. They had no intentions upon it. We have to study
every circumstance connected with the contract and come to a conclusion.”

Indeed determination of a choice of law where there is none can sometimes be made by a
process known as DEPECAGE (derived from French verb ‘depecer’ which means to cut up,
to dismember) . In common law countries this concept usually means a single contract
which provides different part of the contract shall be governed by different laws. See:
Broome v Antler’s Hunting Club (1978) 448 F. Supp 121.
Depecage, a French abbatorial term for the process of chopping up or dismembering,
suggests that separate parts of a conflict problem maybe severed from the whole and
referred to different systems of law.. If the issues are referred to different systems of law
this is called ‘depecage’ by the French and ‘picking and choosing’ by the Americans. (See:

41
Reese (1973) 73 Col L Rev 58.

Questions to consider under this topic:

1. An international contract may have several places where acts to effect the contract
have to be performed and it may not be apparent what is the connecting factor
particularly if the clause purporting to indicate the intention of the parties is vague
and ambiguous.
(a) Based on obiter dicta in the case of Jacobs v Credit Lyonnais (1884) 12 QBD589,
what process do the English courts apply in deciding which choice of law to use
in settling a dispute between the parties?
(b) What approaches would the court use to infer a choice of laws in an
international contract where the evidence was not sufficient for the court to
determine that there had been either an express or implied choice of law clause.

Question 2
(a) Based on the obiter dicta from the case of Compagnie d’Armement Maritime
SA v Compagnie Tunisienne de Navigation SA (1969) 3 AllER 589- what can
be said to be a clear express clause of the contract?
(b)In the event that the English courts consider the clause to be “vague and
ambiguous” what other factors may it use to infer the intention of the parties?
(c) In the absence of any clause identifying a governing law how does the dicta
found in the case of “The Assunzione” (1954) P150 serve as a guide?

42
Topic 5 The Law of Tort- LEX LOCI DELICTI COMMISSI 3 hours

A solution when difficulties arise relating to one country is to apply the law which has the
closest and most real connection with the parties and the issue. The proper law of the tort
has in various guises had considerable influence in the decisions of US and other courts.
Since the middle of the 19th century, the choice of law rules in the law of tort were
governed by a number of leading judgments. The general view was that even if the cases
were correctly decided on their own particular facts, the underlying general principles
were difficult to deduce.

Selecting the governing law has been problematic and has evolved, over the years several
choice of law rules have been proposed from time to time as being the most appropriate
but some have been adopted. One is, the law of the place where the tort was
committed-lex loci delicti commissi.

Common law choice of law rule

The common law choice of law rules may be stated as follows:

When the tort is committed in England, English law alone applies: Szalatnay-Stacho
v. Fink65. Where the facts were as follows: the defendant, an official of the Czech
Government in exile in England, sent some documents to the President of the Czech
Republic who was also in England. These documents, which were published in England,
alleged misconduct by the plaintiff, who was the Czech Acting Minister in Egypt. The
plaintiff brought an action for defamation. Under Czech law, the publication of these
documents fell within the defence of absolute privilege, which meant that no action for
defamation could be brought under that law. Under English law, however, the defence of
qualified privilege applied. This meant that the defendant would not be liable where,
having had information placed upon him, he was under a duty to disclose them. The Court
of Appeal held that, as the documents had been published here, the tort was
committed in England, and therefore, English law was the governing law.
This principle was confirmed by the Court of Appeal in Metall und Rohstoff AG v Donaldson

65
(1947) KB 1 CA

43
Lufkin and Jenrette Inc66, where it was stated that, if the tort was committed in England,
then English law would apply to the dispute.
When the conduct takes place abroad, liability is determined by English law, subject to the
condition that, if liability exists by English law, it must also be civilly actionable in
damages by the law of the place where it took place. This is known as the rule in Phillips v.
Eyre67, as interpreted in Chaplin v. Boys, as the latter was explained by the Court of Appeal.
In Phillips v. Eyre an action for assault was brought in England against the Governor of
Jamaica, the alleged tort having been committed in Jamaica. This was a tort by English law
and would have been so by Jamaican law, but after the tort was committed, the Jamaican
legislature passed an Act of Indemnity, relieving the governor of
liability. It was held that the claimant could not recover here. In a celebrated
judgment Willes J said, in words which have sometimes since been treated as if they
were contained in a statute, that conduct abroad is actionable as a tort in England if:

(1) it is of such a character as to make it actionable as a tort had it been

committed here [i.e. English law applies], and (2) it is not justifiable by the law
of the place where it was committed.

In Phillips v. Eyre itself, (1) was satisfied, but (2) was not, so the claimant’s action failed.
The first requirement was derived from the decision of the Privy Council in The Halley68. In
this case, an action was brought by the owners of a Norwegian ship against those of a
British ship arising out of a collision in Belgian waters, caused by the negligence of a
Belgian pilot on board the latter ship. His presence was required by Belgian law. By
Belgian law the British owners were liable for his negligence; by the then English law they
were not.

The defendants were held not liable. None of the justifications can withstand examination,
yet all five members of the House of Lords in Chaplin v. Boys69 approved The Halley. This
was the only point on which they all said the same thing, though it was the one point not in
issue in the case. This requirement has always been more harshly criticised than the
second requirement, though it has given rise to fewer problems in its
application.

The second requirement, that the conduct must be ‘not justifiable’ by the local law, has
proved more troublesome and has been given different meanings at different times. In
Phillips v. Eyre itself, the word ‘justifiable’ meant precisely that, for the governor’s conduct
was ‘justified’ by the subsequent legislation. In other contexts, it could mean one of
several things: (i) the conduct must be a tort by the local law, or (ii) the claim must
be in some way civilly actionable thereby, or (iii) though the claim is not civilly
actionable, the conduct is ‘wrong’ by that law.

This would include conduct which attracts criminal liability only. At first, ‘justifiable’ was
taken to mean (i). In The Mary Moxham70, action in respect of damage caused by an
66
(1990) 1 QB 391
67
(1870) LR 6 QB 1
68
(1868) LR 2 PC 193
69
(1971) AC 356
70
(1876) 1 PD 107

44
employee to a pier in Spain, it was held that the defendant employers, not being
vicariously liable by Spanish law, themselves bore no tortious liability and so were not
liable in England.

But in Machado v. Fontes71, meaning (iii) was adopted. The facts of the case were; an action
was brought in respect of an alleged libel published in Brazil. According to the evidence,
by Brazilian law the defendant was under no civil liability at all, but could be prosecuted
for a criminal offence. It was held that the existence of criminal liability under Brazilian
law meant that the libel was ‘not justifiable’ by the lex loci, so the claimant could obtain
such damages as were available under English law. His ability to get such damages though
he could not do so by the lex loci hardly seems what Willes J had in mind by the words ‘not
justifiable’.

The repudiation of Machado v. Fontes and the adoption of meaning (ii) by the Scottish
Court of Session in McElroy v. McAllister72 led to an even more unfortunate,
and indeed preposterous, result. The facts were; the pursuer’s late husband was injured in
an accident in Shap in

England, forty miles south of the border, when in a lorry being driven by
another employee while they were on the business of their Scottish employer. All parties
were Scots. She sued as her husband’s executrix a native in Scotland claiming (1) under
Scots law (lex fori ), solatium; (2) and (3) by English law under the Law Reform Act 1934
on behalf of his estate and under the Fatal Accidents Act; (4) by both laws the funeral
expenses. (1) was not actionable in English law (lex loci) and (2) and (3) were not
actionable under Scots law (lex fori) so (4) being the only head of damage recoverable
under both laws, all the widow obtained were the funeral expenses. Apart from other
considerations, this result is absurd.

The choice of the law rule was examined afresh by the English courts, including the House
of Lords, in Chaplin v. Boys but in a most confused manner. The facts of the case were; the
claimant and defendant were both English servicemen who had been posted on duty to
Malta. They met for the first time when the defendant, in his motor car, collided with the
claimant, on his motorcycle, and injured him. The car was insured in England. The claimant
was released from the services and soon got a job. He sued the defendant, who admitted
negligence. The only issue was about the amount of damages the claimant could recover.
Under English and Maltese law he could recover his actual pecuniary losses, but these were
small. But under English law, though not Maltese law, he could recover damages for pain
and suffering. Could he obtain such damages here?
All three courts which heard the case (Milmo J, the Court of Appeal by a majority (Lord
Upjohn and Lord Denning MR, Diplock LJ dissenting) and the House of Lords
unanimously) held that the claimant could recover but the members of the House gave
different reasons for this.

The ratio decidendi of their decision is not easy to discern, but it is unnecessary to subject
the speeches of their Lordships to close analysis to discover it, since in several subsequent

71
(1897) 2 QB 231 CA
72
(1949) SC 110

45
cases the Court of Appeal has said what it is. In Church of Scientology of California v.
Commissioner of the Metropolitan Police73, which concerned an alleged libel written in
England and published in Germany, and in Coupland v. Arabian Gulf Oil Co74., where the
tort was committed in Libya, the ratio of Chaplin v. Boys was stated to be contained in the
speech of Lord Wilberforce, that is to say, that as a general rule the defendant’s conduct
must be actionable as a tort according to English law, subject to the condition that civil
liability in respect of the relevant claim exists as between the actual parties under the law
of the foreign country where the act was done.

This is, of course, the rule as it was applied in McElroy v. McAllister. The general rule can
be stated in different words as follows. If the claimant cannot prove liability in tort under
English law as the lex fori, he will fail. If he can do so then he will win unless the defendant
shows he has a defence by the lex loci. Should the defendant do this, then the claimant
must show he can, nevertheless, recover under that law. If he does so he wins, if he does
not do so, he loses75.

Defamation: the general rule applied

If the defendant’s words are not defamatory, or do not refer to the claimant, or have not
been published to a third party, or the defendant can rely on a defence, such as
justification, absolute privilege, qualified privilege or fair comment and in the case of the
last two defences cannot be shown to have been motivated by malice, they are not
actionable in tort by English law. The claimant will therefore lose. He will
do so if the defendant is not vicariously liable for the defamation committed
by someone else.

If the statement is actionable by the claimant against the defendant under English law, the
former will nevertheless lose if the defendant can show he is not liable to the claimant
under the foreign law. So if, for example, there exists only criminal liability under that law,
or he is not vicariously liable by that law, or the claimant is his wife and by the foreign
law spouses cannot sue each other, or there exist thereunder defences, such as those
mentioned in the previous paragraph, the action will fail.

The place where the tort is committed

It is easy to decide where a tort is committed if all the elements necessary to constitute
liability occur in one country. Where they take place in different countries, it is not so easy
to decide. As will be seen, the common law on this matter was not entirely consistent but
in recent times the English courts adhered to a test of deciding where the substance of
the tort occurred. Almost all the relevant cases did not concern choice of law but service
out of the jurisdiction and whether the tort had been committed in England (or in the
country whose courts were asked to allow service out of the jurisdiction).

The decisions in the defamation cases all held that where a defamatory statement was
written or spoken in one country but published in another country then, since publication
73
(1976) 120 SJ 690
74
(1983) 1 WLR 1136
75
J.G. Collier, Conflict of Laws 3rd ed pg 225

46
is the gist of the action, the country where publication took place was where the tort was
committed. The only ‘choice of law’ case concerned defamation. In Church of Scientology
of California v. Commissioner of Metropolitan Police, the alleged libel was contained in a
report composed in England and sent to West Berlin (Germany). The Court of Appeal held
that the tort was committed in Germany, that is, where the substance of the tort occurred.

Personal injury
Where the cause of action is in respect of personal injury or death resulting from personal
injury, the applicable law is that of the country where the individual was when he
sustained the injury. If A in Germany shoots an arrow across the border with France and
hits and injures B in France with it, French law applies. If B is brought to England and dies
here, French law is still the applicable law. Section 11(3) says that ‘personal injury’
includes disease or any impairment of physical or mental condition. So, if B comes to
England and here, as a result of being struck by the arrow, contracts dermatitis or blood
poisoning, loses temporarily or permanently the use of his right arm, or becomes insane,
French law is the applicable law.

Property damage
Where the cause of action is in respect of damage to property, the law of the country
where the property was when it was damaged applies. So, if in the above example, B’s car
was damaged, French law applies. It applies also if, in consequence of the crash, no
damage was observed at the time but the car falls apart after it is brought to England.

Other torts
With respect to other torts, such as misrepresentation, inducing breach of contract
and other economic torts, the applicable law is that of the country in which the most
significant element or elements of the events occurred. No further elaboration of
‘significance’ is given and the courts will have to work this out and apply it for themselves.
Presumably, they will derive guidance from cases decided under the common law and
adopt something like the ‘substance of the tort’ test, which was adumbrated in Distillers
Co. (Biochemicals) Ltd v. Thompson76 (a personal injury case) and applied also in non-
personal injury cases like Metall und Rohstoff AG v. Donaldson, Lufkin and Jenrette Inc.
in which the Court of Appeal held that where a conspiracy took place in New York to
induce a breach of contract in England, the tort was committed in England.

Negligence
In George Monro Ltd v American Cyanamid and Chemical Corpn77, the Court of Appeal

76
((1971) AC 458
77
(1944) KB 432

47
laid down the test as being: ‘Where was the wrongful act, from which the damage flows, in
fact done?’ The question was not where the damage was suffered, even though damage
might have been the gist of the action. In this case, it was held that the wrongful act was
done in New York, where the goods were negligently manufactured, and not in England,
where they caused injury and damage to a farmer who used them on his land. However, in
Distillers Co (Bio-Chemicals) Ltd v Thompson, the Privy Council modified the test by
addressing the question of: ‘where in substance did the cause of action arise?’ The case
concerned a drug, Distaval, which was manufactured in England and marketed in New
South Wales, Australia. The exporting company neither warned the importing company
nor put a warning on the drug disclosing the risks associated when taken by pregnant
women in the early weeks of pregnancy. The plaintiff’s mother purchased the drug in
Australia, where she consumed it whilst pregnant. This resulted in the baby being born
with physical deformities. An action was brought in the Australian court. On appeal to the
Privy Council, the substance test was applied and it was held that the tort was committed
in Australia. Unlike the above case, where the tort consisted of negligent manufacture in
New York, here the tort consisted of negligent failure to give adequate warnings as to the
drug’s harmful side effects in Australia, where it was marketed. (See, also, Castree v
Squibb Ltd78, where it was held that, in ascertaining the place of tort, the court had to look
back over the series of events which were said to constitute the tort and decide where in
substance the cause of action arose. The plaintiff’s cause of action arose in England, since it
was not the mere manufacture of the defective machine which constituted the tort, but the
act of placing it onto the English market with no warning as to its defects. Accordingly, the
tort was committed in England.)

Fraudulent misrepresentation
Where the alleged tort is one of fraudulent misrepresentation made by instantaneous
communications, then according to Diamond v Bank of London and Montreal Ltd
(1979), the tort is committed when the message was received and acted upon. Equally, in
Armagas Ltd v Mundogas SA (1986), the Court of Appeal held that the tort of fraudulent
misrepresentation was committed where the misrepresentation was communicated orally
and acted upon in Denmark.

Questions to consider under this topic:

1. Conflict of laws rules in torts committed in foreign countries seek to identify the
proper law of the tort, in various categories, that is the lex loci delicti commissi-
occurring and/or originating in foreign countries.
(a) What is the effect of torts committed outside England as per obiter dicta in the
celebrated case of Philips v Eyre (1870) LR 6 QB1?
(b) What is the proper law of the tort in a case of defamation where the defamatory
statement originated abroad?
(c) What is the importance of the ruling in the case of Boys v Chaplin (1968) 2

78
(1980) 1 WLR 1248

48
 QB1 in torts committed abroad?

Topic 6 MARRIAGE- LEX LOCI CELEBRATIONIS 2 sessions

The choice of law rules which govern the validity of a marriage, and which, therefore, also
govern nullity of marriage, depend on the particular issue which is involved. The old rule
of English conflict of laws was to the effect that, whatever the ground of invalidity that was
alleged, the conclusion of a marriage was a matter for the law of the place where it was
celebrated. But since about 1860 this rule has, generally speaking, been confined to
questions of formalities of marriage. There now exist several different choice of law rules
for marriage, some of which are disputed or difficult to state with full confidence.

Basically, there are four requirements of a valid marriage: (i) that the requisite formalities
are complied with; (ii) that the parties have legal capacity to marry each other; (iii) that
they freely and knowingly consent to do so; and (iv) that the marriage is consummated.
These will be discussed in turn; the discussion will be followed by an account of the law
relating to polygamous marriages.

Formalities of marriage/ Formal validity

Formal requirements of a marriage include such matters as whether a religious or a civil
ceremony is necessary, whether banns have to be called or notices published and the form
of words which must be used.

No rule of the conflict of laws is clearer or longer established than the one which lays
down that these matters are regulated by the lex loci celebrationis, the law of the place
where the ceremony takes place, which reflects the rule locus regit actum. Thus a
ceremony which takes place in France produces a formally valid marriage if it complies
with the formal requirements of French law; it does not do so if it complies with the
personal law of the parties but not with French law. This was made clear as early as 1752,
and the rule was reaffirmed by the Privy Council in the case of Scrimshire v. Scrimshire
(1752) 2 Hagg and in Berthiaume v. Dastous79, where a marriage performed by a French
cure (priest), of two French Canadians in France in the mistaken belief that it had been
preceded by a civil ceremony as required by French law was held invalid.

In Taczanowska v. Taczanowski80 the Court of Appeal was prepared to apply renvoi and to
hold that, if a marriage was not celebrated in compliance with the lex loci celebrationis, but
that law would hold the marriage valid if it accorded with the parties’ personal law, it
would be valid here.

The lex loci celebrationis also determines whether a marriage can be celebrated by proxy.
In Apt v. Apt81 a ceremony performed in Argentina between a man who was there and a
woman in England who was represented there was recognised since representation by
79
(1930) AC 79
80
(1957) P 301
81
(1948) P 83

49
proxy was permitted by Argentine, though not by English, law. Indeed, a marriage may be
recognised even though the lex loci celebrationis does not require the presence of either
party personally or by proxy, if the entertaining case, McCabe v. McCabe82, is correct. H
was domiciled in the Irish Republic, W in Ghana. They met in London. W became pregnant
by H, had an abortion and became pregnant by him again. They lived together in England.
W’s great uncle Mark, who was visiting England from Ghana, suggested H and W should
marry according to the custom of the Akan, a people in Ghana. Over lunch they agreed.
Uncle Mark told H that he had to provide a bottle of schnapps and £100 as ‘aseda’
(earnest). H gave him £100 and a bottle of gin (which would do instead of schnapps), and
Uncle Mark took these back to Ghana, where a ceremony was held at W’s father’s house. H
and W were neither present nor represented (nor was Uncle Mark, through illness). The
ceremony was performed by W’s Uncle Nelson. Eight members of W’s family were there.
W’s father and the rest of the gathering assented to the marriage.

They opened the bottle of gin and all drank some of it from a glass. They changed the £100
into Ghanaian cedis and shared some of them out; the rest of the cedis (though not the gin)
were taken and given to other members of the family. W now petitioned for a divorce and
H argued that there had never been a valid marriage. The Court of Appeal held that the
marriage was valid since it was valid by Akan law, which did not require presence
personally or by proxy of the parties and which required H’s consent as given by him
presenting the money and the gin. The difficulty with this conclusion is that the court’s
judgment is entirely concerned with its assessment of the (very distinguished) expert
evidence of Akan law as the lex loci celebrationis. It did not consider whether the locus
celebrationis was Ghana (under whose law, one expert said, no ceremony was necessary
at all) or whether it was England, where H and W consented to marry. This, the relevant
point of private international law, does not seem to have been argued.

With respect to retrospective changes in the law of the country of celebration subsequent
to the date of the marriage, the House of Lords held in Starkowski v. Attorney-General that
a marriage which was formally invalid by the local law when it was celebrated was
validated by the operation of a law enacted in the foreign country in question at a
later date. The facts of the case were as follows:
H and W, both domiciled in Poland, married in Austria in May 1945
in a religious ceremony. At that time Austrian law required a civil
ceremony. In June 1945 the Provisional Government of Austria enacted a law which
enabled religious ceremonies to be retrospectively validated if they were publicly
registered. A child (Barbara) was born of the union. H and W then came to England
and acquired a domicile here. W then bore a child (Christopher) by S, another Pole.
Then, unknown to W, who had separated from H, H registered the Austrian
ceremony in Austria. W then went through a marriage ceremony with S at the
Croydon register office. Christopher asked for a declaration that he had been
legitimated by the subsequent marriage of his parents. This was refused; the
English marriage of W to S was void since the Austrian marriage had been validated
by its registration.

The case exemplifies the general problem of the ‘time factor’ in the conflict of laws. Three

82
(1994) 1 FLR 40

50
variations of the facts have been propounded, though the House declined to give any
decision on them. (1) If the Croydon ceremony had preceded the registration, recognition
of the validation would have entailed invalidation a valid English marriage. It is hoped that
the ‘validation’ would not have been recognised.(2) Suppose the Austrian marriage had
originally been valid but was later invalidated by an Austrian law. (3) Would the decision
have been the same if the Austrian marriage had been annulled by an English court before
it was registered? This would have meant that an English court would disregard the effect
of an English judgment. There is, as yet, no answer to these questions. The actual decision
has come in for commendation on the ground that it upheld a marriage. But it should be
observed that the question of the validity of the marriage arose incidentally in the course
of deciding the real question, which was whether Christopher was legitimated. He can
hardly have been happy with the result, though no doubt Barbara was, since the decision
meant that she was not illegitimate in the eyes of English law.

Exceptions to the formal validity test/lex loci celebrationis

There are several exceptions to the general rule, two of them statutory.

The Foreign Marriage Acts 1892–1947

These (as amended slightly by the Foreign Marriage (Amendment) Act 1988) provide that
a marriage celebrated thereunder in a foreign country or place before a marriage officer
(generally a British consul) between two parties of whom at least one is a British citizen is
valid under English law though invalid under local law.

Military marriages under the Foreign Marriage Act 1892

This renders valid marriages celebrated by chaplains of HM forces between parties, one of
whom must be a member of HM forces (though not necessarily a British citizen). It
supersedes the common law rule that a marriage ‘within British lines’ according to English
common law is valid. It does not apply to a marriage of a member of foreign armed
forces not operating directly under British command.

Common law marriages

It has been held that where there is no available legal form of ceremony in the foreign
place of celebration, or if the local form is unsuitable, a marriage which complies with the
requirements of English common law as it existed before 1753 is valid in England. This
has had some surprising consequences. Thus a marriage between Canadians in a remote
part of China in a ceremony performed by a Church of Scotland clergyman was held valid
by English common law, as was a marriage in eclectic form between a Jew and a non-
Christian Chinese woman presided over by an elderly Chinese gentleman in Singapore,
see: Penhas v Tan Soo Eng (1953) AC 340).
In the nineteenth-century decision in R v. Millis83 the House of Lords held, controversially,
that the common law required not only that the parties should agree in each other’s
presence (per verba de praesenti ) to take each other as man and wife, but that their vows
should be exchanged before an episcopally ordained clergyman. This may have been
historically incorrect, and the decision was on an equality of votes. It has subsequently
been held that such a clergyman’s presence was not necessary if there was none available

83
(1844) 10 Cl & Fin 543

51
or if it should be inappropriate to require it.

Marriages on the high seas on board merchant ships

It appears that the validity of a marriage celebrated on board a merchant ship would be
determined by the law of the ship’s flag, if the ship is then on the high seas. This would be
the English common law, if the ship’s port of registry was in England, provided it was
impracticable to wait until the ship reached port.

Consular Marriages

Capacity to marry
A major issue relating to choice of law in the context of marriage is the question of which
law governs capacity, otherwise known as essential validity. This question covers a wide
range of issues, such as: consanguinity (blood relationships); affinity(relationships created
by virtue of marriage);remarriage; lack of age; and parental consent (unless it is classified
as an issue of formalities). As a general rule, capacity to marry is governed by the dual-
domicile rule, but subject to some exceptions. Each of these will be examined separately.
Essential validity test
The dual domicile rule
Before about 1860, the lex loci celebrationis was regarded as governing all questions
affecting the validity of the marriage, but in two cases decided at that time, the courts
clearly distinguished between formal validity, which is governed by the lex loci, and
essential validity, governed by the parties’ personal law.
Consanguinity and affinity
In Mette v. Mette84, which concerned the revocation of a will by marriage, a German who
was domiciled in England married his deceased wife’s sister, who was domiciled in
Germany, in a ceremony there. Though the marriage was valid by German law it was
invalid under English law, whereby the man had no capacity to marry his deceased wife’s
sister. The marriage was held void. In Brook v. Brook85, which concerned legitimacy and
succession, a man married his deceased wife’s sister in Denmark, under whose law the
marriage was valid. Both were domiciled in England; the House of Lords held that the
marriage was void.

84
(1859) 1 Sw & Tr 419
85
(1861) 9 Hl Cas 193

52
These decisions appear to have been based on the fact that one or both of parties was
domiciled in England under whose law the incapacity existed, but it must be admitted that
the facts and indeed the wording of the judgments are consistent with the intended
matrimonial home test. The decisions in the following cases seem to be inconsistent with
the intended matrimonial home test.
In the first, Sottomayor v. de Barros86, the facts (so it then appeared) were that:
A marriage took place in England between two Portuguese cousins domiciled in Portugal.
Both their respective parents went to England in 1858 and occupied a house jointly in
London. At the time of the marriage the husband was aged 16 and the wife 14. Moreover
the marriage was one of convenience, in order to preserve the Portuguese property of the
wife’s father from bankruptcy. Although the couple had lived in the same house for 6 years
the marriage was never consummated. By the law of Portugal first cousins were incapable
of contracting a marriage on the ground of consanguinity and such a marriage was null
and void unless solemnised under a Papal dispensation. The wife petitioned for a decree of
nullity on the ground of this incapacity. The suit was undefended, but the Queen’s Proctor
intervened and alleged that at the time of the marriage the parties were domiciled in
England and not Portugal and therefore the validity of the marriage was determined by
English domestic law.
The Court of Appeal held that the personal capacity of the parties must depend on
their law of domicile. The marriage was rendered invalid as Portuguese law did not
confer capacity and under Portuguese law they could not marry without Papal
consent, which they did not have.
The Court of Appeal held that the marriage was void since their capacity was
governed by the law of the ante-nuptial domicile and not by that of the place of
celebration, by which they had capacity to marry.

Lack of age
The dual domicile doctrine has advantages in that it identifies the legal system with which
a party has the closest legal connection. As a test it can be applied on the day that the
marriage takes place. It also puts the parties on an equal footing as it does not prefer the
husband’s pre-nuptial law to the wife’s. Also it enables the validity of the marriage to be
establishes prior to the ceremony. It may however present a challenge if the parties move
to a different jurisdiction. In the case of Alhaji Mohammed v Knott 87 this doctrine was
discussed. The facts of the case were as follows: The appellant a Nigerain muslim man
aged 26 married a girl aged 13 also a Nigerian muslim of the hausa tribe. The marriage
was valid according muslim law of the domicile. It was potentially polygamous. The
appellant and the girl went to London where the appellant was studying medicine. Shortly
thereafter a complaint was made against the husband to the effect that the girl due to her

86
(No1) (1877) 3 Pd 1
87
(1968) 2 AllER 563

53
age was in need of care and protection by virtue of section 2 of the Children & Young
Persons Act 1963. Pursuant to s62 the Justices made a ‘fit person order’ committing her
to the care of the London Borough of Southwark.
On appeal, it was held that the marriage would be recognised by the English court as
a valid marriage giving the girl the status of a wife and held that the justices had
misdirected themselves by ignoring the way of life in which the parties had been
brought up.

Polygamous marriages
Polygamous marriages when celebrated in a country which allows polygamy have come to
be recognised in English law for most purposes, such as matrimonial relief, proprietary
rights arising out of a contractual claim, legitimacy of children, social security and
succession.
The dual domicile rule regarding polygamy is that a marriage celebrated after 31 st July
1971 shall be void on the following grounds:
(a) Either party was at the time of the marriage domiciled in England and Wales
(b) Matrimonial Causes Act 1973 s 11 (d)
English courts recognise all potentially polygamous marriages celebrated outside the UK
where the party to the marriage is domiciled in England. In the case of Shahnaz v
Rizwan88 the parties were married in India in accordance with Muslim rites. The marriage
contract provided that the wife was to be granted a ‘dower’ (lump sum of money) payable
to her in the event of divorce or her husband’s death. Under Islamic law the right of dower
once due was enforceable by a civil action and was regarded as a proprietary right.
Following her divorce the wife brought an action claiming the dower due on the ground
that the claim was a lawful contractual one for the purpose of enforcing a proprietary right
arising out of a lawful contract of marriage.
Conversely the husband contended that as the marriage was potentially polygamous,
English courts had no jurisdiction over, or did not extend jurisdiction to, the wife’s claim.
Nonetheless, Winn J upheld the wife’s claim, but made it clear that the right she was
seeking to enforce was a right in personam arising not out of the relationship of husband
and wife but out of a contract entered into in contemplation and in consideration of the
marriage and was not therefore a matrimonial right which the court would refuse to
enforce. Winn J’s refusal to enforce a matrimonial right was in line with the then existing
inability of the English courts to grant matrimonial relief in the context of such marriages.
(This has changed by virtue of s47 (1) of the MCA 1973 as amended by Part II of the PILA
1995).
Children born out of polygamous marriages are regarded as legitimate. In the case of

88
(1965) 1 QB 390

54
Hashmi v Hashmi89 a Pakistani man and woman were married in 1948 in Pakistan in
accordance with Muslim rites. In 1957 whilst his first marriage was still subsisting the
husband went through a ceremony in England with an Englishwoman at the Bradford
Registry Office. Subsequently three children were born to them. In 1968, the second wife
petitioned for divorce on the grounds of cruelty and adultery. On the issue of whether the
children from the second marriage would be recognised by Pakistani law, the law of the
husband’s domicile, a valid subsisting marriage even though void for the purposes of
English law, the children of that marriage were regarded as legitimate.

Polygamous marriages are also regarded valid for purposes of succession. It was
established in the case of Bamgbose v Daniel90that these children succeed to property in
England provided that the marriage is valid by both the lex loci celebrationis and the
personal law of the parties. A difficulty arises as to whether a child of a polygamous
marriage can succeed to a title of honour. This was examined in the case of The Sinha
Peerage Claim91where it was established by the House of Lords that the eldest son of a
potentially polygamous Hindu marriage was entitled to succeed to a peerage conferred on
his father, the marriage having become monogamous by a change in religion before the
claimant was born or the peerage created. Lord Mangham LC, who delivered the
Committee of Privileges judgment, declined to express a view in relation to a child’s
succession as heir or his succession to entails when he was discussing problems which
could arise in cases of actually polygamous marriages. He stated; if there were several
wives, the son of a second or third wife might be the claimant to the dignity, to the
exclusion of a later born son of the first wife. “Our law as to heirship has provided no
means of settling such questions as these”.
English courts are prepared to recognise polygamous marriages in order to invalidate a
subsequent monogamous marriage celebrated in England, as illustrated in the case of
Baindail v Baindail.92In this case, a husband while domiciled in India married a Hindu
woman in accordance with Hindu rites, whereby polygamy was permitted. Whilst the wife
was still alive, he went through another ceremony of marriage with an Englishwoman at a
Registry office in London. When the second wife became aware of the previous marriage
she petitioned for a decree of nullity of her marriage.
The Court of Appeal held that as a general rule the status of an individual depends on his
personal law, the law of his domicile. By the law of the husband’s domicile at the time of
his Hindu marriage, he unquestionably acquired the status of a married man and that was
recognised by English law. Accordingly, the first marriage operated as a bar as to render
the second marriage void.
Equally, a polygamous marriage is recognised even though the wife is a minor under
English law. A striking example is the case of Mohammed v Knott.
89
(1971) Fam 36
90
(1995) AC 107 PC
91
(1946) 1 AllER 348
92
(1946) P 122

55
Re-marriage
The dual-domicile rule appears to apply also to capacity to re-marry. This may be
illustrated in the case of Padolecchia v Padolecchia93where a man who was domiciled in
Italy married there in 1953. In 1958 he was granted a divorce by proxy by a Mexican
court. Neither he nor his wife set foot there. The divorce was recognised in Mexico but not
in Italy. In 1963, he was transferred by his employers to Denmark, where he met a Danish
woman domiciled there. In 1964, they both went to England on a one day visit where they
were married at a London Registry office. After 3 months of cohabitation, the husband left
the matrimonial home in Denmark and never returned. In 1966, he petitioned for a decree
of nullity in the English court on the ground that his first marriage was still subsisting at
the time of contracting the second marriage. Sir Jocelyn Simon P held that the question
to be determined was whether the petitioner’s first marriage was still subsisting at
the time the second marriage was celebrated, or whether it had been dissolved by
the Mexican decree. Applying the dual-domicile rule, he concluded that at the time
of the second marriage, the husband had no capacity to enter into a fresh marriage
in England, because Italian law did not recognise the Mexican decree. Accordingly
the second marriage was null and void.

The Intended Matrimonial Home rule

The second test to govern the essential validity of a marriage is that the law of the
intended matrimonial home/domicile of the marriage is to govern the validity of the
marriage with the proviso that if no matrimonial home could discovered reference should
be made to the husband’s ante-nuptial domiciliary law.
It is argued that the intended matrimonial home test enables the country with the closest
interest in the marriage to determine the validity of the marriage; some argue; by analogy
with company law that it enables the legal system to identify the ‘true seat’ of the
marriage.
Also it is argued that by testing the validity of the marriage against a single legal system
one is more likely to validate the marriage. In the case of Radwan v Radwan94 it was
decided that the intended matrimonial home rule applied to capacity to contract a
polygamous marriage. In this case, the marriage was celebrated in France in Muslim
(polygamous) form. The husband was a Muslim domiciled in Egypt who already had a wife
married to him in Egypt by Muslim rites. The second wife was domiciled in England at the
time of the ceremony but the parties set up their matrimonial home in Egypt after the
marriage as they had intended at the time of the marriage. Some years later, they moved
to England and when the wife petitioned in the English court for a divorce, the question
arose whether the marriage was valid. It was argued that it was void because under

93
(1968) P314
94
(No 2) (1972) 3 AllER 1062

56
English law as the law of the second wife’s ante-nuptial domicile the wife lacked
capacity to marry a man who was not single. By Egyptian law the polygamous
marriage was valid however and the judge held it valid on the application of the
intended matrimonial home rule.
The decision has been strongly criticised mainly on the ground that it is well
established that other aspects of capacity to marry are subject to the dual-domicile
rule. But as Cumming-Bruce, J said, “it is arguable that it is an over-simplification of the
common law to assume that the same test for purposes of choice of law applies to every
kind of incapacity-non-age, affinity, prohibition of monogamous contract by virtue of an
existing spouse and capacity for polygamy. Different public and social factors are relevant
to each of these types of incapacity…” It is certainly hard to see why such a marriage as
that in Radwaan v Radwan should be void.
In the case of Lawrence v Lawrence95 the wife then domiciled in Brazil obtained a divorce
from her first husband in Nevada (USA). The next day in Nevada she married the second
husband, who was domiciled in England. England was also the intended matrimonial
home and the parties set up home there very soon after the marriage. The wife’s Nevada
divorce was recognised by English law but not by the Brazilian law under which she
remained married to her first husband. The wife petitioned in the English court for a
nullity decree on the ground that the marriage was bigamous. English and Brazilian law
agree that the wife did not have the capacity to contract the second marriage unless she
was single.
The conflict arose because the two laws, taking different views as to the validity of the
Nevada divorce also took different views as to whether the wife was single when she re-
married. Which law should govern? The trial judge held that the validity of the re-
marriage was governed by English law as the law of the intended matrimonial
home, since it was the country with which the marriage had its most real and
substantial connection. Since the divorce was recognised by English law, the re-
marriage was valid.
The converse situation to that in Lawrence v Lawrence can also occur, where the divorce
is not valid by the lex fori, but is valid by the lex causae. In the Canadian case of Schwebel
v Ungar 96, the wife and her first husband were originally domiciled in Hungary. On their
way to settle in Israel while in Italy, but still domiciled in Hungary, the husband divorced
the wife under Jewish laws. They then made their way to Israel where they both became
domiciled and where the divorce was recognised as valid. Some years later, the wife sill
domiciled in Israel married in Ontario a second husband who was domiciled there. The
divorce obtained in Italy was not recognised in Ontario.
The second husband petitioned in the Ontario court for a nullity decree, on the ground
that when the wife’s second marriage was celebrated she was still married to her first
husband. The Canadian court held the re-marriage valid because using the dual-
domicile rule the wife’s capacity to re-marry was governed by the law of Israel and
95
(1985) 1 AllER 506
96
(1963) 42 DLR (2d) 622

57
by that law the divorce was valid even though it was not valid by the lex fori-
Ontario.

Earlier support for the intended matrimonial home rule came from the Court of Appeal
from the case of De Reneville v De Reneville97 where it was held that “the law of the
husband’s domicile at the time of the marriage or preferably the law of the matrimonial
domicile in reference to which the parties may have been supposed to enter into the
bonds of marriage”.
Most recently it has been suggested by a member of the Court of Appeal in Lawrence v
Lawrence, that whichever test-whether the dual-domicile or the intended matrimonial
home rules- would lead to the marriage being valid should be applied.
This would mean that the marriage would only be invalid if it is so BOTH by the law of the
intended matrimonial home and by the law of domicile of one or both of he parties. It
remains to be seen whether this approach will be taken up. It can be justified on the basis
that there is no reason to hold a marriage in valid on a ground based on public interest
(such as polygamy or prohibited degrees) if it is valid by the law of the country where the
marriage relationship is to exist. However even if it is invalid by the law of the country, the
spouse expectation that their marriage which is objectionable by the standards of their
own countries at the time of marriage, will be valid, should be met.
Validity by the law of the intended matrimonial home alone should not however be
sufficient for incapacity such as non-age imposed for the protection of a party who should
be able to rely on the law of his own country at the time of the marriage.
However the strongest objection to the intended matrimonial home approach is that it is
said to lead to unacceptable uncertainty.
According to Morris, very serious practical difficulties are likely to arise if the validity of a
marriage has to remain in suspense while we wait and see (for an unspecified period)
whether or not the parties implement their (expressed) ante-nuptial intention to acquire
another domicile. This is especially true if interests in property depend on the validity of a
marriage, such as where a widow’s pension ceased on her re-marriage.
If the parties take long to settle or move from country to country due to employment then
the husband’s domiciliary law before the marriage may be relied on.

PUBLIC POLICY
It is an established principle that the English courts would neither enforce nor recognise a
right or obligation arising under a foreign law if to do so would be contrary to public
policy. It may be recalled that according to the decision of Hyde v Hyde98 English law used

97
(1948) P 100
98
(1866) LR ! P & D 130

58
to regard polygamous marriage as against public policy. However this attitude has
changed over the years and they are now recognised.
In the case of Cheni v Cheni99it was held that a marriage celebrated in Egypt between an
uncle and his niece was not contrary to public policy since it was valid by the law of their
ante-nuptial domicile. Sir Jocelyn Simon P stated that “the true test was whether the
marriage was so offensive to the conscience of the English court that it should refuse
to recognise and give effect to the proper foreign law. In deciding that question, the
court will seek to exercise common sense, good manners and a reasonable
tolerance.”

___________________________________________

Questions to consider under this topic:

1. The ‘dual domicile’ doctrine is said to be applicable in determining the essential validity
of marriage for sociological, religious and other reasons particularly to reduce the risk of
defective offspring as a result of polygamy, and defective marriages due to consanguinity
and lack of age. How was the dual domicile doctrine test applied in the cases of:
(a)Brook v Brook (1861) 9 HL Cas 193 and Sottomayor v De Barros (No1) (1877) 3 PD 1
(b)Discuss the formal validity test of a marriage and some of its exceptions.

2. It is a well established principle that the formal validity of a marriage depends

entirely on the law of the place where the ceremony was performed- lex loci
celebrationis.
(a) How do the English courts determine the formal validity of a marriage based
on obiter from the case of Starkowski v Att Gen (1954) Res Jud 4 and other
leading authorities.
(b) What are the exceptions to the formal validity test?

99
(1965) P 8

59
Topic 7 Law of Property- LEX SITUS 2 sessions
English domestic law classifies the subject matter of ownership of, and other interests in,
property into realty and personalty. However for purposes of the conflict of laws, the
classification is between movables and immovables.
Where there is a conflict between the law of the forum and the law of the situs as to
whether a particular right may be characterised as one relating to movable or immovable
property, it is well settled that, in such a situation the law of the situs determines the
characterisation. In the case of Re Berchtold100 English land held on trust for sale which by
English law was, in consequence of the equitable doctrine of conversion, regarded as
already sold and therefore as money, which is movable property, was held to be an
immovable. Count Richard Berchtold died domiciled in Hungary possessed of freehold
land in Birmingham, England, which was settled on trust for sale with power to postpone
sale. The question arose, whether one set of persons entitled under Hungarian law, or
another entitled under English law, should take the land. The former would succeed if the

100
(1923) 1 Ch 192

60
interest was movable property, the latter if it was immovable. The former argued that
since English law regarded land held on trust for sale as personalty it was movable
property and Hungarian law applied. The latter replied that the first question was whether
it was immovable or movable. Since land is immovable by English law, the interest was an
interest in an immovable, so English law governed. Only then might the question whether
it was realty or personalty arise, in order to determine who, under English law, was
entitled to it. The court decided in favour of the claimants under English law, holding
that when a person of foreign domicile dies intestate leaving English realty which
has been converted into personalty the succession thereto is governed by the lex
situs.

Jurisdiction under common law

Under traditional rules, where an immovable property is situated outside England then
the court which is said to have competent jurisdiction to determine title to, or the right to
possession of, that immovable property is the court of the country where the property
is situated. This rule was first established by the House of Lords in British South Africa
Co v Companhia de Mocambique101 in the following terms: English courts have no
jurisdiction to entertain an action for the determination of the title to, or the right to
possession of, any immovable property situated outside England, or for the recovery of
damages for trespass or other torts to such immovable property. Such an action is best
tried in the courts of the place where the property is situated.
The facts of the case were as follows: the plaintiff, a Portuguese company brought an
action against the defendants alleging that the defendant company had wrongfully taken
possession of certain of their land in South Africa. The plaintiff claimed:
 A declaration as to title
 An injunction
 Damages for trespass.
The Court of Appeal by a majority ruled that the damages action should proceed.
The House of Lords reversed this and ruled that an English court did not have
jurisdiction to determine disputes over foreign land or damages actions arising
therefrom. Lord Herschell, LC made clear that this was a rule of substantive law and
did not depend on a distinction between local and transitory venues. The House of
Lords stressed that while the general principle might be subject to limitations the
rule itself was founded upon substantive considerations and did not derive from
procedure. The fundamental principle was that any judgment over foreign land
would be ineffective unless recognised by the authorities within the les situs and
that there might be many social policies in the lex situs such as the protection of
tenants which require the attention of the court there.
In stating what is known as the Mocambique rule the jurisdiction of the English courts
101
(1893) AC 602

61
had been limited even in cases where the action concerned the question of the recovery of
damages for trespass to foreign land, irrespective of whether or not a question of title to
the land was in issue.
After 1893 questions arose as to how far the Mocambique rule extended and what was the
scope of any exception. The matter was considered in the case of St. Pierre v South
American Stores (Gath & Chaves) Ltd102 where the facts were: the plaintiffs brought an
action against the defendants, two English companies to recover arrears of rent in respect
of leasehold premises in Chile. The defendant applied to have the action stayed.
Porter, J refused to stay the action and his refusal was upheld by the Court of Appeal. The
Court of Appeal allowed the action to proceed, asserting that the Mocambique rule
only applied to actions founded upon disputed title and did not extend to actions
founded upon personal obligations where no question of title arose.
The Mocambique rule fell to be considered again by the House of Lords in the case of
Hesperides Hotels Ltd v Muftizade103 (Upholding Hesperides Hotel Ltd v Aegean Turkish
Holidays Ltd (1978) QB 205) where the facts were: the plaintiffs who owned hotels in
Northern Cyprus were forced to vacate the properties after the Turkish invasion of 1974.
At a later date, the plaintiffs brought an action against a London travel agent arguing that
the organising of holidays in the hotels constituted a conspiracy to trespass. They added a
claim in respect of the contents of the hotels.
Lord Denning, MR in his judgment at Court of Appeal devoted his attention to the legal
effects of an unrecognised government.
However the House of Lords applied the Mocambique rule and ordered that the
claim in respect of conspiracy to trespass be struck out for want of jurisdiction.
However the plaintiffs were allowed to pursue the claim in respect of the contents of
the hotels.
The effect of the judgment was however reversed by section 30 (1) of the Civil Jurisdiction
and Judgments Act (CJJA) 1982 which states:
“ The jurisdiction of any court in England and Wales or Northern Ireland to entertain
proceedings for trespass to or any other tort affecting immovable property shall extend to
cases in which the property in question is situated outside that part of the UK unless the
proceedings are principally concerned with the question of title to or the right to
possession of that property.”
In recent years the Mocambique rule has received considerable attention in the area of
industrial and intellectual property law following the ruling in Tyburn Productions Ltd v
Conan Doyle104 . In this case, the defendant was the last surviving daughter of Sir Arthur
Conan Doyle and was in dispute with the plaintiff company as to the extent of the
copyright in the US in respect of the characters ‘Sherlock Holmes’ and ‘Dr Watson.’ The

102
(1936) 1 KB 382
103
(1979) AC 50
104
(1991) Ch 75

62
plaintiffs brought an action in the Chancery Division seeking a declaration that no such
rights arose under US law. Vinelott, J refused to make a declaration holding that the
Mocambique rule rendered any question of foreign intellectual property rights non-
justiciable in an English court. The judge reasoned that jurisdiction could not be
assumed because any order made by an English court would not be effective in the
US.
The rule was also considered in the case of Pearce v Ove Arup Partnership.105

Exceptions to the Mocambique rule

The common law has established three main exceptions to the Moçambique rule. They
apply where the proceedings are based either on some personal obligations or on the
administration of trusts or estates.
These are as follows:
(i) Where the English court is exercising jurisdiction and administering an English trust
or will which consists in whole or in part of foreign land and question of title thereto
arises incidentally. In so far as the general principle rests upon the basis of effectiveness,
Win that an English court could not make its determination effective in the face of a
contrary decision by a local court, this does not apply in such a case as the present, where
an English court can act upon the person of the trustee or personal representative.
(ii) Equitable jurisdiction in personam. This is a somewhat ill-defined exception based
on the principle that the English courts can act in personam upon a person within their
jurisdiction to enforce a personal obligation incumbent on him when the subject matter is
land abroad, by making a decree of specific performance against him and dealing with him
as being in contempt of court if he disobeys. The basic requirements are (a) that the
defendant is within the jurisdiction; (b) that the subject matter of the action arises out of a
contract between the parties, or concerns his fraudulent or other unconscionable conduct,
or arises from an equitable or fiduciary relationship; and (c) that the act the defendant is
ordered to do must not be illegal or impossible by the lex situs. The cases in which the
English courts have operated in this way are few; this is understandable since they are
effectively doing by a roundabout route what they disclaim a right to do directly.
Moreover, it is doubtful whether they would themselves, as the courts of the situs of
English land, take a similar foreign decree into account. Requirement (b) needs further
elaboration.
Contract. This is the clearest case. In Penn v. Baltimore, a decree of specific performance
was made to enforce a contract to fix the boundaries of Pennsylvania and Maryland. The
courts have ordered the creation of a legal or equitable mortgage of foreign land in
pursuance of an agreement to do so and in West (Richard) & Partners (Inverness) Ltd v.
Dick specific performance was ordered of a contract of sale of land in Scotland.

105
(1997) Ch 93

63
Fraud. In Cranstown v. Johnston a creditor, ostensibly in order to recoup money owed to
him, refused the debtor’s tender of payment and put up the debtor’s land in St Cristophe at
a public sale but bought it himself at a low price. He was ordered to reconvey the land on
payment of the debt, otherwise a gross injustice would be perpetrated and perpetuated.
Any other equity or fiduciary relationship. The difficulty is to determine when this arises in
cases other than fraud. It requires a privity of obligation between the parties but it is no
easier to determine when this exists.
Thus in Norris v Chambres The chairman of a company agreed to buy mines in Prussia
for the company and paid part of the price to the vendor. He then committed suicide,
whereupon the vendor repudiated the agreement and conveyed the mines to trustees for
another company, who knew of the payments made by the chairman. The latter’s
administrators brought an action against the trustees who were in England, claiming a lien
on the mine for the amount of the payments. Neither the original company nor the vendor
were parties to the action. It was held that the court had no jurisdiction.
This case is difficult to reconcile with Mercantile Investment & General Trust Co. v.
River Plate & Co. where the facts of the case were as follows: An American company
issued debentures to the plaintiffs secured by an equitable charge on land in Mexico. It
then transferred the land to the defendant company, the transfer deed stating that the
defendant was to hold the land subject to the charge, but the registration needed to make
this condition binding under Mexican law was not effected. The court held that it had
jurisdiction to enforce the charge since the defendants had expressly agreed to respect the
claimant’s rights when taking a transfer of the land. It is not easy to distinguish this case
from Norris v. Chambres, since the difference between buying a mine with notice of a
previous contract and taking property subject to notice of a charge, even when expressly
agreeing to be bound by it, seems somewhat tenuous. The River Plate case can better be
distinguished as a case in which the defendant was accused of fraud or other
unconscionable conduct.
(iii) The third exception exists where English courts are asked to entertain an action in
rem against a ship to enforce a maritime lien on the ship for damage caused to foreign
immovable property.

Choice of Law- Immovable property

The general assumption in favour of the lex situs was determined by a variety of case law.
In the case of Re Duke of Wellington the rationale behind the judgment is that uniformity
with the lex situs is crucial for an immovable property and can only be dealt with in a
manner permitted by that law.
Further, in the case of Re Ross a testatrix, British subject died while domiciled in Italy. Her
wills in respect of her English and Italian estates excluded her son from the list of
beneficiaries. This exclusion was allowed by English domestic law which required that one
half of her property should go to her son. The son brought an action in the English court

64
contesting the validity of the wills. The English court referred the ‘essential validity’ of
these wills to Italian law in relation to both immovable property as the law of the situ and
the movables as the law of her domicile. Expert evidence showed that an Italian court
would apply the law of the testatrix’s nationality (English law) and accordingly the wills
were held to be valid.
Capacity to take and transfer immovables
Unless a person has capacity to transfer immovable under the lex situs a transfer will be
held invalid. This rule was established in the cases of; Duncan v Lawson and Bank of Africa
v Cohen.
In the case of Duncan v Lawson, the facts were; a domiciled Scotsman left freehold and
leasehold property in England for charities registered in England. Under English law such
a gift would have been void under the Mortmain and Charitable Uses Act 1888. Two
questions arose;
(a) Whether English law as the law of the situs rendered the gift void
(b) Whether English or Scottish law should govern in the event of intestacy
In giving judgment upon a special case remitted by the Court of Session, Kay J accepted
that both questions were governed by the lex loci rei sitae so that both the capacity of the
charities to take and the intestate succession to immovable property were governed by
English law.
In Bank of Africa v Cohen a married woman domiciled in England, made a contract with
an English Bank whereby she agreed to mortgage her land in South Africa as security for
loans made and to be made by her husband. Subsequently, she refused to effect the
contract and the bank sued for specific performance. The defendant raised the defence
that by South African law, married women had no capacity to give security for their
husband’s debts. Both the court of first instance and the Court of Appeal upheld the
defence, on the basis that her capacity was governed by the lex situs, and accordingly the
contract was void.
Choice of Law- Tangible movables
Common law rules in conflict of laws distinguish between tangible and intangible
movables; known as ‘choses in possession’ and ‘choses in action’ respectively.

Law of the domicile for tangible movables

In earlier cases it was held that the applicable law should be that of the owner’s domicile
based on the maxim: mobilia sequuntur personam, that is; movables follow the person.
However this raised the question of whether the court should adopt the law of the seller
or the buyer’s domicile. This is problematic where the deceased leaves property in more
than one country. Secondly, in the case of Alberta Provincial Treasurer v Kerr it was held
that the maxim was confined to cases of devolution of property on death and movable

65
property could not be presumed to be located where the owner was domiciled.

Law of the place of the act- LEX LOCI ACTUS

The second possibility is that the governing law should be that of the country in which the
transaction is completed (in intangible movables). There are various objections to this
approach:
(1) The location may be accidental and have no connection with the substance of the
dispute
(2) Two authorities support lex loci actus: Alcock v Smith and Embricos v Anglo-
Austrian Bank. But it is clear that the learned judge was drawing a distinction with
the law of the domicile and speaking of a negotiable instrument where the lex loci
actus and lex situs will be the same since a cheque cannot be delivered or signed
without it being in physical possession of a party.
(3) An attempt to adopt the lex loci actus would be contrary to the limited role of the lex
loci contractus which has been a feature of conflict of laws since the 19th century.

The proper law of the transfer- LEX ACTUS

A third possibility is that the governing law should be the law of the country with which
the transfer has the closest and most real connection, similar to the doctrine of the proper
law of the contract. Difficulties in this approach are:
 The case may not involve a transfer but some other action such as a theft
 A case may involve contemporaneous dealings affecting more than one
country eg a businessman domiciled in England, transfers to another
business man domiciled in Denmark property/chattels located in different
warehouses such as New York, Mexico City and in transit from South Africa.
It would be difficult to find a proper law.
 The case may concern independent transactions operating in two different
jurisdictions such as in the case of Inglis v Robertson where the conflict was
between the unpaid seller and the pledge of the purchaser.

The law where the chattel is situated (law of the situs)

The fourth possibility is that the governing law should be the law of the situs. This solution
should be the law of the situs. This solution has more advantages than disadvantages:
 Unlike the law of the domicile, it avoids having to choose between the law of the
domicile of more than one party
 It is in line with the territorial principle in both private and public international law
 A given country has power over the chattel and it is logical to select a legal system
which meets the test of effectiveness

66
  This choice leads to confidence and certainty in international business transactions
 Most legal authority over 100 years in UK and USA indicate preference to the law of
the situs
 No other test has shown to be as advantageous.

Lex situs in tangible movables

Most authority indicates a preference to the lex situs as the governing law in respect of
transfer of tangible movables. This was examined in the case of Cammell v Sewell where a
cargo of timber was shipped from Russia to Hull (UK) on board a Prussian ship (modern
day Germany). The ship was seriously damaged off the Norwegian coast. Consequently,
the master of the ship sold the damaged timber without obtaining the owner’s consent.
The goods were subsequently brought to England and sold to the defendants. On an action
by the original owners challenging the defendants title, the English court held that as the
transfer of title was valid in Norway, that is, the lex situs at the time of the disposition, that
transfer would be recognised in England. Accordingly, the plaintiffs’ claim failed.
The judgment in the case of Cammell v Sewell is authority for three propositions:
I. That title of an original owner can be lost by conduct within the lex situs
II. That if a valid title is subsequently acquired under lex situs then it will override and
prevail over a prior title
III. A subsequently acquired title in the lex situs is not lost by removing the goods to
England.
In the case of Re Anzani court observed “I do not think that anybody can doubt that with
regard to the transfer of goods, the law applicable must be the law of the country where
the movable is situated (les situs)”
The ruling in Cammell v Sewell was followed by Slade, J in the case of Winkworth v
Christie, Manson & Woods where the facts give rise to competing claims of innocent
parties. The facts were; works of art were stolen from the home of a plaintiff in England.
Taken to Italy and sold to a second defendant, another Italian who sent them back to
England to be auctioned by the first defendants. Under domestic Italian law it was
accepted that A acquired good title but most likely did not under English law. The court
was required to determine whether at the time of the transfer to A, title was governed by
English law or Italian law as the law of the situs.
Court held that Italian law which was the law of the situs at the time of the transaction was
to govern and by that law the buyer obtained good title when he brought the pictures in
Italy.

Change of situs
In deferring to the lex situs the legal position could be affected by the removal of the

67
property from that jurisdiction.
In the case of Todd v Armour the plaintiff sought recovery of his house which had been
stolen in Ireland from the defendant who had bought it in Scotland. The stolen horse had
been stolen in Ireland from the defendant who had bought it in Scotland. The stolen horse
had been sold in Ireland to a buyer in ‘market overt’ who had taken it to Scotland and sold
it to the defendant. By Irish law the sale in ‘market overt’ passed good title to the buyer.
The Court of Session held that the buyer since he had acquired good title under Irish law
could lawfully pass that title on to the defendant and the original owners rights had been
entirely superseded leaving him with whatever personal action he could pursue against
the actual thief.

Gifts
The governing law for inter vivos gifts is that of the lex situs as was determined in the case
of Cochrane v Moore where facts of the case were; the owner of a horse purported to
make a gift of a quarter of the value of the horse to its jockey (professional rider), Moore.
The parties were domiciled in England and the horse was stabled in Paris, France. The
owner then mortgaged the horse to Cochrane. Cochrane agreed to respect the agreement
with the jockey. At a later date, Cochrane exercised his power of sale and Moore claimed a
quarter of the proceeds of sale.
The Court of Appeal held that the gift not being by way of deed or delivery was
ineffective, French law was not pleaded so no firm conclusions could be drawn on
the relevant law. The Court of Appeal considered that the subsequent decision by
Cochrane constituted a binding oral declaration of trust in respect of a quarter
share of the proceeds.

INTANGIBLE MOVABLES
An intangible movable may be described as an interest which is not directly related to a
physical object or land, such as shares, patents, negotiable instruments, cheques,
copyrights, patents and debts. They may also be referred to as ‘choses in action’.
The proper law of the debt, is the law which governs the original relationship between the
debtor and creditor and thereby controls the creation of the interest which is the subject
matter of the assignment. The original relation between debtor and creditor will be
governed by whatever law applies to its creation thus if the debt is a contractual debt, it
will be governed by the law of the contract.
The lex situs and the proper law of the debt are often the same. See: Standard Chartered
Bank Ltd v IRC.
In Republica of Guatemala v Nunez (1927), the President of Guatemala assigned to his
son, a minor domiciled in Guatemala, the sum of £20,000, which he had deposited in a

68
London bank. This assignment, though valid by English law, was invalid by Guatemalan
law because, inter alia, a minor could not accept it unless a judicial trustee had been
appointed, and this was not done. Scrutton LJ and Lawrence LJ, the only two judges who
dealt with the issue of capacity, stated that such an issue was governed either by the law of
domicile or by the law of the place of the transaction. The governing law for transfers
based on this case is the place where the funds are received.

************************

Questions to be considered under this topic:

1. English common law classifies the subject of ownership of and interests in property for
purposes of conflicts of law in two distinct categories; that is immovables and movables.
Where there is a conflict between the law of the forum and the lex situs as to whether a
particular right may be characterised as one relating to movable or immovable would
depend on the situs.
(a)What is the jurisdiction of the English court concerning immovable property located
abroad. Cite legal authority for your assertion.
(b)What is the distinction between “choses in possession” and “choses in action” and what
was the lex situs in the case of Republica de Guatemala v Nunez (1927) 1KB669?
2. English common law classifies the subject of ownership of and interests in property
for purposes of conflicts of law in two distinct categories; that is immovables and
movables. Where there is a conflict between the law of the forum and the lex situs
as to whether a particular right may be characterised as one relating to movable or
immovable would depend on the situs.
(a) What is the jurisdiction of the English court concerning immovable property
located abroad. Cite legal authority for your assertion.
(b) What is the distinction between “choses in possession” and “choses in action”
and what was the lex situs in the case of Republica de Guatemala v Nunez
(1927) 1KB669?
(c) In the event of a transfer of tangible movables from one person to another what
is the situs where goods are stolen in one country and re-sold in another?

69
Topic 8 RECOGNITION & ENFORCEMENT OF FOREIGN JUDGMENTS 3 hours

Conflict of law rules permit a plaintiff to sue a defendant outside the jurisdiction and
thereby to obtain judgment for a matter in a foreign court as the appropriate forum. The
question which arises is whether the plaintiff can enforce such a judgment or whether he
would have to institute fresh proceedings against the defendant. The basic rule is that
due to the doctrine of territorial sovereignty, a judgment delivered in one country
cannot be directly recognised and enforced in another unless there exists an
international agreement between the two countries in question. Nevertheless,
English law has long allowed the recognition or enforcement of a foreign judgment in
England provided that the judgment meets certain requirements.
At common law, foreign judgments have been recognised and enforced by English courts
since the 17th century. This was initially based on the ground of comity. However this
theory has been superceded by the ‘doctrine of obligation’ which was stated in the case of
Schibsby v Westenholz and Others (1870) 6 QB in the following terms;
…the true principle on which the judgments of foreign tribunals are enforced

70
 in England is…that the judgment of a court of competent jurisdiction over the
defendant imposes a duty of obligation on the defendant to pay the sum for which
judgment is given, which the courts in this country are bound to enforce; and
consequently that anything which negatives that duty or forms a legal excuse for
not performing it, is a defence to the action.
In other words once a court of competent jurisdiction has rendered a judgment for a sum
to be paid by the defendant, this sum becomes a legal obligation which may be enforced in
England by an action for the debt. Consequently, the burden lies on the defendant to prove
to the English court why he or she should be excused from performing this obligation.
The recognition and enforcement of foreign judgments is governed by the following
statutes:
 Civil Jurisdiction and Judgments Acts 1982 and 1991 (CJJA)
 Administration of Justice Act 1920 (AJA)
 Foreign Judgments (Reciprocal Enforcement) Act 1993
 Foreign Judgments (Reciprocal Enforcement) Act Cap 76 f the Laws of Zambia.

Prior to the coming into force of the CJJA 1982, a plaintiff, who obtained a foreign
judgment for a debt and the judgment could not be satisfied where it was rendered, had
the option of either bringing an action in England for the debt or bringing fresh
proceedings against the defendant on the original cause of action. This latter option
however has been abolished by s34 of the CJJA 1982 which provides that:
No proceedings may be brought by a person in England and Wales…on a cause of
action in respect of which a judgment has been given in his favour in proceedings
between the same parties or their privies, in a court in another part of the United
Kingdom or ina court of an overseas country, unless that judgment is not
enforceable or entitled to recognition in England and Wales.

Therefore, if a foreign judgment is entitled to recognition or is enforceable in the English

courts, then according to s34, the plaintiff has to sue on the foreign judgment rather than
bring fresh proceedings on the original cause of action. This is so irrespective of whether
the foreign judgment is entitled to recognition or enforcement at common law by statute.
The application of s34 can be seen in the case of Republic of India v India Steamship Co
Ltd wherein the plaintiff brought an action in India claiming short delivery of a cargo of
munitions which was shipped from Sweden to India. During transit, a fire occurred in the
hold and caused a number of shells and chares to the jettison. The plaintiff was successful
at first instance in India but an appeal was still pending at the time of the English
proceedings. During the Indian proceedings at first instance, the plaintiff commenced an
action in rem in the English courts. The defendants argued that the latter claim was
excluded by virtue of s34 of the CJJA 1982, which acted as an absolute bar to English

71
proceedings brought on a cause of action on which judgment had been given by an
overseas court. The House of Lords held that where proceedings in England were
commenced before judgment had been given in the court of an overseas country,
but are continued after judgment, those proceedings could naturally be described
as brought on a cause if action in respect of which a judgment had been given within
the meaning of s34.
Requirements for recognition and enforcement
At common law, a successful litigant seeking to enforce a foreign judgment in England has
to institute fresh legal proceedings, that is, he or she must sue on the obligation created by
the judgment. Alternatively, he or she may plead the judgment res judicata in any
proceedings which raise the same issue. If a fresh action is brought in England he or she
can apply for summary judgment under RSC Ord 14 so long as the defendant has no
defence to the claim as was held by Grant v Easton. This is so provided that the action in
England satisfies the English rules as to jurisdiction and service of writs.
These provisions are reinforced by statutory rules which operate a more direct
process of registration of foreign judgments. The two most important statutes are:
Administration of Justice Act 1920 and the Foreign Judgments Act 1933 (and Cap 76
of the Laws of Zambia). Section 13 of the AJA 1920 provides for the enforcement, by
registration within the UK of judgments obtained in a superior court of any part of the
Commonwealth party to the Act.
According to s 9 (1), a person who has obtained a judgment in any part of the
Commonwealth may apply within 12 months to the High Court to have the judgment
registered. Registration however is discretionary and not as of right, since the registering
court can refuse the application unless “in all the circumstances of the case…it thinks it
just and convenient that the judgment should be enforced in the United Kingdom”.
This policy of facilitating the direct enforcement of foreign judgments received further
progress by the FJA 1933, which applies the principle of registration to countries of the
Commonwealth as well as to politically foreign countries. This Act although drafted in
much more detail applies provisions similar to those of the AJA 1920. However by virtue
of s 2 of the FJA 1933 a successful litigant may apply to the High Court for the registration
of a foreign judgment at any time within six years and no discretion is given to the High
Court, which shall order the judgment to be registered, provided it complies with the
other provisions of this Act. Both the AJA 1920 and the FJA 1933 however rely very much
on reciprocity and consequently, a foreign judgment is not registrable within the UK
unless the provisions of the Acts extend by Order in Council to the country in which the
judgment has been obtained.
As both the AJA 1920 and the FJA 1933 are restricted in scope and limited to geographical
boundaries, the common law rules are still extensively relevant. Moreover, whilst the
provisions of both Acts tend to reproduce the common law closely, there remain diverging
differences in a few detailed rules, which will be examined as and when necessary.

72
The jurisdiction of a foreign court
The most essential requirement for recognising or enforcing foreign judgments in England
whether at common law or under both the AJA 1920 or the FJA 1933 is that the foreign
court which rendered the judgment in question had jurisdiction in the international sense
to entertain the action.
In other words the English court would not effect a foreign judgment unless the foreign
court was jurisdictionally competent according to the English conflict of law rules.
In the case of Emanuel v Symon Buckley, J stated as follows:
In actions in personam there are five cases in which the courts of this country will
enforce a foreign judgment: (1) where the defendant is a subject of the country in
which the judgment has been obtained (2) where he was resident in the foreign
country when the action began (3) where the defendant in the character of plaintiff
has selected the forum in which he afterwards sued (4) where he has voluntarily
appeared; and (5) where he has contracted to submit himself to the forum in which
the judgment was obtained.
These requirements will be examined individually, as follows:

(1) A subject of the foreign country

The nationality of the defendant can no longer be relied on to justify the jurisdiction of the
foreign court. Indeed nationality as a basis of jurisdiction has been doubted by Diplock J, in
Blohn v Desser by McNair J in Rossano v Manufacturer Life Insurance Ltd and by
Ashworth J in Vogel v R and A Kohnstamm Ltd respectively.
(2) Residence
It is a well settled principle that the residence of the defendant in the foreign country
when the action began is sufficient ground for jurisdiction. Although the term residence
has been used in numerous case law and it appears in 4(2)(a)(iv) of the FJA 1933, it is not
precisely defined. Clearly, residence includes physical presence, but whether presence
alone will suffice is doubtful. However, there has been some support for this principle in
Carrick v Hancock (1895), and more recently in Adams v Cape Industries plc (1990),
where the Court of Appeal took the view that ‘the voluntary presence of an
individual in a foreign country, whether permanent or temporary and whether or
not accompanied by residence, is sufficient to give the courts of that country
territorial jurisdiction over him under our rules of private international law’.
However, to base jurisdiction on the casual presence within the foreign jurisdiction may
not be very desirable, since though it remains a basis for English jurisdiction, the English
rules on jurisdiction operate in conjunction with the doctrine of forum non conveniens.
Nevertheless, one may safely state that there has been no single decision reported in

73
which the English court declined to enforce a foreign judgment by reason only that the
defendant was merely present, but not resident, within the jurisdiction of the foreign
court.
In relation to a corporate defendant, there seems to be no doubt that there must be a fixed
place of business within the jurisdiction of the foreign country, and from which the
corporation operates. The test was set out by the Court of Appeal in Adams v Cape
Industries plc (1990). It has to be shown that:
(a) [the corporation] has established and maintained at its own expense
(whether as owner or lessee) a fixed place of business of its own in the other country,
and for more than a minimal period of time has carried on its own business at, or
from, such premises by its servants or agents (a ‘branch office’ case); or
(b) a representative of the overseas corporation has, for more than a
minimal period of time, been carrying on the overseas corporation’s business in the
other country at, or from, some fixed place of business.
In relation to the second requirement, if business is carried on by a representative, then
the question whether he or she has been carrying on the overseas corporation’s business,
or has been doing no more than carry on his or her own business, will necessitate an
examination of his or her functions and all aspects of his or her relationship with the
overseas corporation. This is likely to involve such questions as the acquisition of business
premises, reimbursement of costs and expenses, contributions by the overseas
corporation, method of payment (whether by commission or regular wages), degree of
control by the overseas corporation and display of the overseas corporation’s name, and
whether the representative has power to bind the corporation contractually. The fact that
he or she never makes contracts, whether with or without prior approval, in the name of
the overseas corporation so as to bind it, is a powerful factor pointing against presence.
In the Adams case, the Court of Appeal applied the above principles to the situation where
the overseas corporation carried on business through its subsidiary in the USA. It was held
that a subsidiary normally acted for itself and not for the overseas parent corporation,
especially since, in this case, the subsidiary had no power to (and never did) bind the
parent corporation contractually. Parent and subsidiary are to be treated as separate legal
entities.
The AJA 1920 appears to apply the same criteria as that applied under the common law.
For instance, in Sfeir v National Insurance Co of New Zealand Ltd (1964), the
defendants, a New Zealand company, who were allegedly carrying on business in Ghana
through an appointed agent, contended that the English court should decline to enforce a
judgment obtained against them in the courts of Ghana on the ground, inter alia, that they
were not resident in Ghana when the action began, in accordance with s 9(2) of the AJA
1920. Mocatta J held that, although the defendants had business carried on by their agent
in Ghana, such business was the agent’s own business and not that of the defendants, since
the former only carried on minor tasks on the defendants’ behalf as well as business for
other companies.

74
As far as the FJA 1933 is concerned, s4 (2)(a)(iv) requires that the corporation must have
its ‘principal’ place of business in the foreign country.
(3) Submission
Submission to a foreign court’s jurisdiction may be effected in various ways. The first and
most obvious way is when a person voluntarily invokes the jurisdiction of the foreign
court. This may take the form of either bringing the action as a plaintiff, or making a
counterclaim or cross-action as a defendant. In this situation, he or she renders himself or
herself liable to a judgment of the foreign court, and he or she cannot afterwards, if sued
upon the judgment in England, contend that the foreign court did not have jurisdiction.
This was held in Schibsby v Westenholz (1870) 6 QB and is stipulated in s 4(2)(a)(ii) of
the FJA 1933. Similarly, where the defendant voluntarily appears in the foreign court, he
or she is taken to have submitted to the jurisdiction if he or she pleaded to the merits of
the case, regardless of the fact that the defendant also contested the jurisdiction (see also s
4(2)(a)(i) of the FJA 1933). However, if the defendant appeared before the foreign court
merely to protest against the jurisdiction of that court, it is now a settled principle, by
virtue of s 33 of the CJJA 1982, that he or she will not be regarded as having submitted to
the jurisdiction. Section 33 provides that:
(1) For the purpose of determining whether a judgment given by a court
of an overseas country should be recognised or enforced…the person against
whom the judgment was given shall not be regarded as having submitted to the
jurisdiction of the court by reason only of the fact that he appeared (conditionally
or otherwise) in the proceedings for all or any one or more of the following
purposes, namely:
(a) to contest the jurisdiction of the court;
(b) to ask the court to dismiss or stay the proceedings on the ground that
the dispute in question should be submitted to arbitration or to the
determination of the courts of another country;
(c) to protect, or obtain the release of, property seized or threatened
with seizure in the proceedings.
(2) Nothing in this section shall affect the recognition or enforcement…of
a judgment which is required to be recognised or enforced…under the 1968
Convention or the Lugano Convention.
(Section 33(2) was amended by the CJJA 1991 so as to include the phrase ‘Lugano
Convention’.)
Section 33 only applies to a judgment rendered by the courts of an overseas country. It
does not make a distinction between enforcement and recognition at common law or by
statute. In relation to enforcement under the FJA 1933, s 33 of the CJJA 1982 replaced the
similarly worded provision of s 4(2)(a)(i) of the FJA 1933.

75
The provision of s33 has the impact of reversing the Court of Appeal decision in Henry v
Geoprosco International Ltd(1976).Here, the plaintiff brought an action in England to
enforce, at common law, a judgment obtained from the court of Alberta. That judgment
was for breach of contract which was governed by English law and which contained an
arbitration clause. The defendant was neither resident in Alberta, nor carried on business
there. When served with the writ, the defendant appeared in the Alberta court and argued
that the service of the writ should be set aside on the ground that Alberta was not forum
conveniens, and that a stay of the proceedings should be granted due to the arbitration
clause in the contract. Both arguments failed and the defendant took no further part in the
proceedings. However, the Court of Appeal held that the judgment given by the
Alberta court was enforceable in England; and that where the defendant had asked
the court to exercise it’s discretion to decline jurisdiction by staying the action or to
decline to assume a jurisdiction which it had under local law, the defendant would
be taken to have submitted thereto.
The meaning and application of s 33 was examined in the case of Chief Harry Akande v
Balfour Beatty Construction Ltd (1998), wherein the plaintiff had obtained a judgment in
Nigeria, for which registration under s 20 of the AJA
wassecuredinEngland.Thedefendantsoughttohavetheregistrationsetaside on the grounds
that it did not submit to the Nigerian jurisdiction within the meaning of s 33 of the CJJA
1982. It was held that the law applicable in the foreign court on the significance of a
conditional appearance was irrelevant, since the test to be applied in English courts in
relation to submission was to be found in s 33. However, s 33 was not an exhaustive test of
what did not amount to submission to the jurisdiction of the foreign court. The
appropriate test was whether the party alleged to have waived his or her other objection
had taken some step which was only necessary or only useful if the objection had been
actually waived, or if the objection had never been entertained.
Another way of submission is where there is an agreement which provides that all
disputes between the parties shall be referred to the exclusive jurisdiction of the foreign
court in question. This may also take the form of an agreement to accept service of process
at a designated address.
In general, an agreement to submit disputes to the jurisdiction of a foreign court must be
express rather than implied. Moreover, it was held in Dunbee Ltd v Gilman and Co
(Australia) Pty Ltd (1968) that, if the parties agreed that disputes under their contract
shall be governed by the law of a particular foreign country, it could be inferred that their
dispute was also subject to the jurisdiction of the courts of that country.

FURTHER REQUIREMENTS FOR ENFORCEMENT

A foreign judgment in personam, albeit rendered by a court having competent jurisdiction
according to the English conflict of laws rules, will not be enforced in England unless it
meets certain requirements. These requirements vary, depending on whether the
application for enforcement is based on the common law rules, the AJA 1920 or the FJA

76
1933.
At common law
In order for a foreign judgment to be enforced at common law, it must be: (a) for a fixed
sum of money; (b) final and conclusive; (c) on the merits; and (d) not a judgment in
relation to foreign revenue, penal or other public laws.
(a) An action brought by a plaintiff to enforce a foreign judgment in
England, which is considered as an action based on a debt, must be for a fixed sum.
Otherwise, the English court will refuse to enforce it. For instance, in Sadler v Robins
(1808), where a court in Jamaica had held that the defendant was to pay the sum of
£3,670 1s 9d to the plaintiff, but subject to the full costs expended by the defendant as
taxed by a master of the court to be deducted therefrom, the English court held that
the judgment could not be enforced since, until taxation, the sum due remained
indefinite. The same principle was held to apply in relation to a foreign maintenance
order by instalments, where the foreign court can vary the instalments payable.
However, if the foreign court has no power to vary the amount for past instalments,
then the arrears can be recovered in England. Similarly, following Beatty v Beatty
(1924), this requirement is satisfied where the debt can be ascertained by a simple
arithmetical process. It follows that a plaintiff cannot enforce a foreign judgment for
specific performance, injunctions or any judgment which orders the defendant to do
more than pay a certain amount of money.
(b) The foreign judgment must be final and conclusive. If the case can be
reopened in the same court, or if there remain some issues to be dealt with, then the
English court will not enforce the judgment. This can be illustrated by the House of
Lords decision in Nouvion v Freeman (1889). Here, the plaintiff in the original action
had sold certain land to the defendant. He brought summary proceedings in Spain
against the defendant and obtained a remote judgment for a sum of money. Under this
type of proceedings, as opposed to ordinary plenary proceedings, a Spanish court, on
proof of a prima facie case, made an order for the attachment of the defendant’s
property without giving notice to the defendant before the order was made. Notice of
this order was given to the defendant, and he was at liberty to appear and defend the
action on a limited number of grounds, but he could not set up any defence to deny
the validity of the transaction which he was sued upon. By Spanish law, if any of the
party failed in this action, that party could institute plenary/ordinary proceedings
before the same judge and then could use every available defence. The House of Lords
held that this remate action could not be enforced in England, since it was liable to be
abrogated by the adjudicating court. However, if the foreign judgment is subject to an
appeal, this will not render the judgment unenforceable, although a stay of the
English proceedings would be ordered pending the outcome of the appeal. This was
said to be the case in Colt Industries Inc v Sarlie (No 2) (1966)).
(c) The foreign judgment must be on its merits. In The Sennar (No 2)
(1985), Brandon LJ elaborated on the meaning of this notion. He stated that (p 499):

77
[A] decision on the merits is a decision which establishes certain facts proved or not in
dispute, states what are the relevant principles of law applicable to such facts, and
expresses a conclusion with regard to the effect of applying those principles to the factual
situation concerned.
A foreign judgment on the merits can be used as a defence against proceedings in England.
This is known as estoppel, which can take two forms: cause of action estoppel and issue
estoppel. Cause of action estoppel is used as a defence where the plaintiff attempts to sue
on the same cause of action in England as that which has been determined by the foreign
court. Issue estoppel, on the other hand, is where the plaintiff to the English proceedings,
albeit the cause of action is different, is prevented from raising a particular issue which
had been decided by a foreign court.
(d) For a foreign judgment to be enforced in England, it must not be for
foreign revenue, penal or other public laws. Hence, the English court will not enforce
a foreign judgment ordering the payment of taxes or penalties (see Huntington v
Attrill (1893) and Rossano v Manufacturers Life Insurance Co Ltd (1963)).
However, the English court will enforce a foreign compensation order made by a
criminal court for the benefit of a victim; for instance, in Raulin v Fischer (1911),
where the defendant, an American lady, while recklessly riding her horse in France,
seriously injured the plaintiff. She was prosecuted for her criminal negligence by the
French authorities. The plaintiff intervened in the proceedings and made a claim for
damages, as allowed under French law. On an action by the plaintiff to enforce the
compensation order, the English court held that the French judgment was severable.
The compensation order, although combined with a penal judgment, was actionable
in England as creating a separate cause of action, and was, therefore, enforceable.
Moreover, in SA Consortium General Textiles v Sun and Sand Agencies Ltd (1978), a
case under the FJA 1933, in which the defendant raised an objection against the
enforcement of part of a French judgment for the sum of FFr10,000, which was awarded
on the basis of the defendant’s unjustifiable opposition to the plaintiff’s claim. The
objection was based on the ground that this sum was for punitive or exemplary damages
and, therefore, a penalty. The Court of Appeal rejected this argument and Lord
Denning MR stated that the ‘word penalty…means a sum payable to the State by way
of punishment and not a sum payable to a private individual, even though it is
payable by way of exemplary damages’.
If the judgment of the foreign court is one which that court had jurisdiction to give, the
English court will not otherwise inquire into the grounds of the decision. For instance, in
Godard v Gray (1870), the plaintiffs, who were Frenchmen, sued the defendants, who were
Englishmen, on a charter party in the French court. The proper law of the charter party
was designated to be English law. The charter party contained a clause which stated:
‘Penalty for non-performance of this agreement estimated amount of freight.’ Under
English law, such a clause did not have the effect of specifying the exact amount of
damages, but instead, such damages would be assessed according to the actual loss
suffered. However, the French court gave the language of this clause a literal

78
interpretation and assessed the damages at the exact amount of freight. The English court
rejected the defendants’ plea, that the French court was mistaken in its assessment of
damages, on the ground that it would not inquire into the merits of the foreign judgment.
The same principle has been applied in relation to the recognition of foreign arbitral
awards. For example, in Dallal v Bank Mellat (1986), the English court held that an
arbitration award made in The Netherlands in favour of the defendant was entitled to be
recognised as binding, and consequently the English court refused to go into the merits of
the award.
Administration of Justice Act 1920
A person who has obtained a judgment in a superior court of any part of the
Commonwealth (s 13), may, within 12 months, apply to the High Court in England or
Northern Ireland, or the Court of Session in Scotland, for its registration, provided that it is
for a fixed sum of money (s 12). Registration of a judgment is not as of right, but
discretionary (s 9(1) and (2)). A judgment registered under the AJA 1920 has the same
force and effect as if it had been rendered by the registering court (s 9(3)).
However, a judgment may not be registered if an appeal is pending, or if the defendant is
entitled and intends to appeal (s 9(2)(e)). By virtue of s 9(5), a plaintiff remains free to
bring his or her action on the foreign judgment under the common law rules. However, if
he or she chooses to do so, then he or she will not usually be able to recover the costs.
ThevAJA 1920 is based on reciprocity, which means that a foreign judgment is not
rendered registrable within the UK unless the provisions of the Act have been extended by
Order in Council to the country in which the judgment has been obtained. The Order in
Council will not be made unless Her Majesty is satisfied that provisions have been made by
the country in question for the enforcement there of UK judgments (s 14 as amended by s
35(3) of the CJJA 1982).
Foreign Judgments (Reciprocal Enforcement) Act 1933
The FJA 1933 was intended to replace gradually the AJA 1920. With this object in mind, s 7
of the FJA 1933 provides the Crown with the power to make an Order in Council to extend
the application of the Act to any Commonwealth country, preventing in this way the
further extension of the AJA 1920. However, the FJA 1933 does not substitute the AJA
1920. In other words, it does not automatically apply to any Commonwealth country party
to the AJA 1920; for that to be done a further specific Order in Council is required. The FJA
1933 applies the principle of registration, not only to the Commonwealth, but also to
foreign countries.
The FJA 1933 also operates on reciprocity. A creditor of a judgment, rendered in a foreign
country to which the Act has been extended, may apply to the High Court in England or
Northern Ireland, or to the Court of Session in Scotland at any time within six years of the
date of the judgment, to have it registered in that court. Unlike the AJA 1920, the court has
no discretion and must order the judgment to be registered, provided that it satisfies the
requirements of the Act (s 2). The Act applies to any judgment of a court and, unlike the

79
AJA 1920, the judgment does not have to be delivered by a superior court, provided that it
is for a sum of money, final and conclusive, and not rendered in respect of taxes or
penalties (s 1(2A) added by s 35(1) and Sched 10, para 1 of the CJJA 1982). A judgment is
considered final and conclusive although an appeal against it is pending (s 1(3)). However,
by virtue of s 5, the court has a discretionary power to set aside the registration or to
adjourn the application, if it is satisfied that an appeal is pending or that the defendant is
entitled and intends to appeal. Moreover, according to s 4(1)(b), a registration may be set
aside if the registering court is satisfied that there is a previous final and conclusive
judgment on the same cause of action which was rendered prior to the foreign judgment
in question by a court having competent jurisdiction. Unlike the AJA 1920, s 6 of the FJA
1933 prevents the party seeking enforcement from bringing an action in England on the
foreign judgment.

Restrictions
All the above instances are subject to s 5 of the Protection of Trading Interests Act
1980, which provides that a court in the UK cannot enforce a judgment for multiple
damages. That is, a judgment ‘for an amount arrived at by doubling, trebling or
otherwise multiplying a sum assessed as compensation for the loss or damage
sustained by the person in whose favour the judgment is given’. Neither can a court in
the UK enforce any judgment specified by the Secretary of State as being concerned with
the prohibition of restrictive trade practices. Clearly, the reference to multiple damages
seems to target US antitrust laws. This prohibition applies whether a judgment creditor is
seeking to enforce a foreign judgment at common law, under the AJA 1920, or under the
FJA 1933.

DEFENCES
There are a number of defences which the defendant can raise in order to escape liability
for the foreign judgment. When considering these defences below and unless otherwise
stated, it is to be assumed that they may be raised at common law, in the context of the AJA
1920, or in relation to the FJA 1933.
The defences which a defendant may plead are as follows.
Fraud
It is a well-established rule that a foreign judgment, like any other judgment, may be
refused recognition or enforcement upon proof that it was obtained by fraud. Such fraud
may take various forms. It may be that the foreign court itself has acted in a fraudulent
manner, as in Price v Dewhurst (1837), or it may be that the successful party had
produced forged evidence or had kept from the foreign court vital evidence, or it may be
that he or she bribed the foreign court.
If fraud is alleged by the defendant, the question arises as to whether the English court

80
will go into the merits of the action which led to the foreign judgment in the absence of
fresh evidence. The Court of Appeal, in no less than four instances, upheld the view that no
fresh evidence is required. In Abouloff v Oppenheimer (1882), Lord Esher said (p 306):
I will assume that in the suit in the Russian courts the plaintiff’s fraud was alleged by the
defendants and that they gave evidence in support of the charge …that the defendants
gave the very same evidence which they propose to adduce in this action; nevertheless,
the defendants will not be debarred at the trial of this action from making the same charge
of fraud and from adducing the same evidence in support of it.
Similarly, in Vadala v Lawes (1890), the Court of Appeal unanimously held that, even if an
allegation of fraud was fully considered by the foreign court prior to rendering its
judgment, this would not stop the English court from investigating the same allegation
again. Also, in Syal v Heyward (1948), the same principle was applied, although the
plaintiff deliberately refrained from raising the issue of fraud in the original action.
The above decisions were approved and followed in two more recent cases, Jet Holdings
Inc v Paid. (1990) and Owens Banks Ltd v Bracco (1992). In the latter case, which
concerned registration of a foreign judgment under the AJA 1920, the House of Lords
treated all the above cases as binding and held that, in relation to fraud, the enforcement
of a foreign judgment, unlike the enforcement of an English one, did not require fresh
evidence before the case could be re-opened. However, the Court of Appeal decision in
House of Spring Gardens Ltd v Waite (1991), which required the defendant to produce
fresh evidence, was distinguished on the ground that the issue of fraud had been tried in
Ireland in a separate and second action from the original one. Accordingly, in this case, the
judgment of the second action created an estoppel, and unless fresh evidence of fraud was
obtained, the original action could not be re-opened.
Finally, although the Owens case was brought under the provisions of the AJA 1920, Lord
Bridge, with whom the other Lords concurred, indicated that both s 9(2)(d) of the
1920Act and s 4(1)(a)(iv) of the FJA 1933 incorporated the concept of fraud from the
common law and, therefore, they bore the same interpretation. He felt, however, that the
concept of fraud needed to be updated so as to take into consideration the changed
circumstances of the 1990s, but that to alter the common law rule without altering the
statutory rules would result in anomalies, and this was out of the question.
Contrary to natural justice
At common law, a foreign judgment may be refused recognition or enforcement if the
proceedings were opposed to natural justice. Although the limits of this defence are not
clear, when applied in the context of foreign judgments, it concerns alleged irregularities
in the procedure by which the foreign court reached its judgment and does not extend to
the merits of the case. For many years, it has been held that the defence may be invoked if
the defendant was not given due notice of the proceedings or was denied a proper
opportunity to be heard(see Jacobson v Frachon(1927)).However, subsequently, in the
case of Adams v Cape Industries plc (1990), the Court of Appeal held that the concept of
natural justice extended to any situation which would amount to a breach of the English

81
court’s views of ‘substantial justice’, such as an absence of a judicial determination of
damages. More recently, the Supreme Court of Bermuda held that it was contrary to
natural justice to require a defendant in the original proceedings to put up, as a condition
of defending, a security he or she could not meet (Muhl v Adra Insurance Co Ltd (1997)).
In relation to both the AJA 1920 and the FJA 1933, neither of them provides for such a
defence. Section 9(2)(c) of the AJA 1920 provides that an application to register a foreign
judgment may be declined if the defendant was not duly served or did not appear in the
original proceedings, and s 4(1)(a)(iii) of the FJA 1933 provides that the registration of a
foreign judgment must be set aside if the defendant in the original proceedings did not
receive notice of the proceedings in sufficient time to enable him or her to defend the case
and did not appear therein.

Contrary to public policy

A foreign judgment will neither be recognised nor enforced in England if it is contrary to
the English principles of public policy. In Re Macartney (1921), a maintenance order was
made in the Maltese court against a man domiciled in England. The order was to provide
maintenance for his illegitimate daughter, who was born in Malta. The English court
refused to enforce this order on the grounds, inter alia, of public policy, in the sense that
English law did not at the time allow for such a maintenance order in favour of an
illegitimate child to be enforced against its father or his estate. According to Israel
Discount Bank of New York v Hadjipateras (1984), the concept of public policy is wide
enough to embrace undue influence, duress and coercion. Public policy provisions are also
made under s 9(2)(f) of the AJA 1920 and s 4(1)(a)(v) of the FJA 1933.
Section 32 of the Civil Jurisdiction and Judgments Act 1982
An additional and important defence which may be invoked, irrespective of whether
recognition or enforcement is sought at common law or under statute, was introduced by
s 32 of the CJJA 1982. However, this section does not affect judgments required to be
recognised and enforced under either the Brussels or Lugano Conventions (s 32(4) of the
CJJA 1982, as amended by CJJA 1991).
Section 32 provides:
(1) …a judgment given by a court of an overseas country in any proceedings shall not be
recognised or enforced in the United Kingdom if:
(a) the bringing of those proceedings in that court was contrary to an
agreement under which the dispute in question was to be settled otherwise than
by proceedings in the courts of that country; and
(b) those proceedings were not brought in that court by or with the
agreement of the person against whom the judgment was given; and
(c) that person did not counterclaim in the proceedings or otherwise

82
 submit to the jurisdiction of that court.
Section 32 applies to judgments given only by the courts of an overseas country, which
means that it applies to any territory outside the UK, but it does not apply to judgments
rendered by the courts of Scotland or Northern Ireland.
For s 32 to apply, three requirements must be met. First, the bringing of the proceedings
must be in breach of an agreement between two parties to settle
thedisputeinquestionotherwisethanby proceedings in the courts of the country where the
proceedings were brought. This situation would arise if, for instance, proceedings were
brought in Belgium when an agreement provided that disputes arising were to be settled
by arbitration in Belgium; or proceedings were brought in California when an agreement
provided that disputes arising were to be settled in English courts. The second
requirement which must be met is that the person, against whom the judgment was
obtained, neither brought nor agreed to the bringing of the proceedings in that court.
Thirdly, it must be shown that the person against whom the judgment was given did not
counterclaim in the proceedings or did not submit to the jurisdiction of that court. To
decide whether that person submitted to the jurisdiction of that court, guidance is sought
from s 33 of the 1982 Act. If all the above requirements are satisfied, then the judgment in
question shall be neither recognised nor enforced in the UK. This defence, however, would
not apply if, according to s 32(2), the agreement was ‘illegal, void or unenforceable or was
incapable of being performed for reasons not attributable to the fault of the party bringing
the proceedings in which the judgment was given’.
The operation of s 32 was considered by the Court of Appeal in the case of Tracomin SA v
Sudan Oil Seeds Co Ltd (No 1) (1983) where the sellers, a Sudanese company, made two
contracts for the sale of ground nuts to the buyers. The contracts provided that they were
governed by English law and that any dispute arising out of the contracts, including any
question of law, should be referred to arbitration in London. A dispute arose and the
buyers brought an action in the Swiss court, contrary to the arbitration agreement. The
sellers applied for a stay of the proceedings in the Swiss court on the basis that the dispute
should be determined by arbitration. The Swiss court, however, refused to stay the action
on the ground that the arbitration clause was of no effect under Swiss law because it had
not been properly incorporated in the contracts. Under English law, the arbitration clause
was valid. The buyers then applied to the English court for an injunction to restrain the
sellers from arbitrating. This was based on the fact that the Swiss decision, invalidating
the arbitration clause, had produced an estoppel, which meant that the sellers could no
longer claim that there was an effective arbitration in England.
The Court of Appeal held that the requirements of s 32 had been satisfied in this
case, and accordingly refused to recognise the Swiss judgment. The reasons for this
view were explained by Staughton J at first instance: (a) the contracts contained an
agreement to refer disputes to arbitration, so s 32(1)(a) was satisfied; (b) the Swiss
proceedings were not brought with the agreement of the sellers, so s 32(1)(b) was
satisfied; and (c) the sellers did not submit to the jurisdiction of the Swiss court
since they merely appeared to contest that jurisdiction, so s 32(1)(c) was satisfied.

83
Limitation of actions
Section 3 of the Foreign Limitation Periods Act 1984 provides that:
Where a court in any country outside England and Wales has determined any matter
wholly or partly by reference to the law of that or any other country (including England
and Wales) relating to limitation, then, for the purposes of the law relating to the effect to
be given in England and Wales to that determination, that court shall, to the extent that it
has so determined the matter, be deemed to have determined it on its own merit.
This provision means that the dismissal of the action in the foreign court on the ground
that it was time barred under a statute is deemed to be a judgment on the merits, that is,
this judgment is treated as conclusive.

Res judicata
English courts will not recognise a foreign judgment if it is inconsistent with a previous
judgment pronounced by a competent English court. For instance, a Belgium nullity decree
was refused recognition in Vervaeke v Smith (1983) on the ground, inter alia, that it was
inconsistent with an earlier English judgment which had determined such a matter. Hence,
the earlier English judgment was res judicata. Moreover, according to Showlag v Mansour
(1994), the same principle appears to apply in the context of two inconsistent foreign
judgments. Indeed, the Privy Council held that where there were two conflicting
judgments (in this case an English judgment and a Jersey judgment), each of which was
pronounced by a court of competent jurisdiction and each of which was final and not open
to impeachment on any ground, then, as a general rule, the earlier of them in time would
be recognised and given effect to the exclusion of the latter.

MECHANISMS FOR ENFORCEMENT

The procedure for the enforcement of judgments in the UK is a two stage process. First, it
involves an ex parte application under s 4 of the CJJA 1982 and an order for enforcement.
The second stage relates to subsequent appeals. When the application is made, the
defendant does not have the right to be heard, or even informed of the application. Clearly,
this provision is intended to prevent the defendant from removing his or her assets from
the jurisdiction where the judgment is sought to be enforced. Once the enforcement of the
judgment is authorised and registered, it has, by virtue of s 4(3) of the 1982 Act, the same
force and effect as if it has been rendered by the registering court in England. In addition,
the costs of registration are recoverable as part of the judgment. Although the Conventions
do not deal with the issue of interest for the period after the judgment is given, s 7 of the
1982Act provides that interest can be recovered on registered judgments provided that it
is recoverable under the judgment in accordance with the law of the Contracting State in
which the judgment was given.

84
Special provisions are provided for the enforcement of maintenance orders under s 5 of
the CJJA 1982.
Once enforcement is authorised, notice of the registration is served on the defendant who,
according to Art 36, has a month from the date of the authorisation, or two months where
the defendant is not domiciled within the jurisdiction, in which to appeal. In England, the
appeal must be made to the High Court and the judgment rendered on appeal is subject to
one further appeal, but only on a point of law (s 6).
On the other hand, if the application for enforcement is refused, then the applicant may re-
apply to the High Court (Art 40). The outcome of this appeal will be subject to one further
right of appeal by either of the parties, but only on a point of law (Art 41).

Recognition and enforcement within the UK

A judgment rendered in one part of the UK may be enforced in another part if it meets the
requirements of s 18 of the CJJA 1982. Enforcement can only be made by way of
registration under Sched 6 of the Act (for money judgments) or Sched 7 (for non-money
judgments). Section 18 initially defines ‘judgment’ in a wide manner and then gives a
detailed list of the judgments it does not cover. For example, it does not cover judgments
given in a magistrate’s court, judgments in bankruptcy or winding up of companies,
maintenance orders, orders concerning the status of an individual, and orders for
provisional measures other than interim payment (see s 18(3), (5), (6) and (7)).
Registration must be set aside if it is contrary to the provisions of Scheds 6 and 7. It may be
set aside if the registering court is satisfied that the subject matter of the dispute had been
previously decided by another court with competent jurisdiction. None of the common law
defences, however, may be invoked.
Finally, s 19 applies in relation to recognition of judgments within the UK.

In Zambia, the relevant statute is the Foreign Judgments (Reciprocal Enforcement Act
Cap 76 of the laws of Zambia section 6 (1). Which deals with defences to
enforcement and recognition of foreign judgments.
Section 6 of the Act provides that on an application in that behalf duly made by any party
whom a registered judgment may be enforced, the registration of the judgment-
(a) shall be set aside if the registering court is satisfied-
i. that the judgment is not a judgment to which this Part applies or was
registered in contravention of the foregoing provisions of this Act; or
ii. that the courts of the country of the original court had no jurisdiction in
the circumstances of the case; or
iii. that the judgment debtor, being the defendant in the proceedings in the
original court, did not (notwithstanding that process may have been duly
served on him in accordance with the law of the country of the original
court) receive notice of those proceedings in sufficient time to enable

85
 him to defend the proceedings and did not appear; or
iv. that the judgment was obtained by fraud; or
v. that the enforcement of the judgment would be contrary to public policy
in the Republic; or
vi. that the rights under the judgment are not vested in the person by whom
the application for registration was made;

(c ) May be set aside if the registering court is satisfied that the matter in dispute in the
proceedings in the original court had previously to the date of the judgment in the original
court been the subject of a final and conclusive judgment by a court having jurisdiction in
the matter.

In Zambia, a foreign judgment must be registered under the Act, in order for it to be
enforced.
Section 4 (1) provides, A person, being a judgment creditor under a judgment to
which this Part applies, may apply to the High Court at any time within six years
after the date of the judgment, or, where there have been proceedings by way of
appeal against the judgment, after the date of the last judgment given in those
proceedings, to have the judgment registered in the High Court and on any such
application the court shall, subject to proof of the prescribed matters and to the
other provisions of this Act, order the judgment to be registered:
Provided that a judgment shall not be registered if at the date of the application-
i. it has been wholly satisfied; or
ii. it could not be enforced by execution in the country of the original court.

2. Subject to the provisions of this Act with respect to the setting aside of registration-
a) A registered judgment shall, for purposes of execution, be of the same force
and effect; and
b) Proceedings may be taken on a registered judgment; and
c) The sum for which a judgment is registered shall carry interest; and
d) The registering court shall have the same control over the execution of a
registered judgment as if the judgment had been a judgment originally given
in the registering court and entered on the date of registration:

Provided that execution shall not issue on the judgment as long as, under this Part and the
rules of court made thereunder, it is competent for any party to make an application to
have the registration of the judgement set aside, or, where such an application is made,
until after the application has been finally determined.

Questions to consider under this topic:

86
1. At common law foreign judgments have been recognised and enforced by English
courts since the 17th century, initially on the ground of comity.
Once judgment is issued in favour of a plaintiff by a foreign court:
(a) What are the requirements for recognition and enforcement by the Court of a
foreign judgment?
(b)What are some of the defences which the defendant can raise in order to escape
liability for the foreign judgment.

87
BIBLIOGRAPHY

O’Brien John, Conflict of Laws (2nd ed) 1999 London Cavendish Publishing Company

Abla Mayss, Principles of Conflict of Laws (3rd ed) 1999 London Cavendish Publishing
Company

J.G. Collier, Conflict of Laws (3rd ed) 2001 Cambridge University Press

Collins, Dicey and Morris, The Conflict of Laws (12th ed) 1993, London- Sweet & Maxwell

88
Neutral Citation Number: [2007] EWHC 952 (Ch)

Case No: HC04C03129

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 04/05/2007

Before :

MR JUSTICE PETER SMITH

---------------------
Between :

Attorney General of Zambia for and on behalf of Claimant

the Republic of Zambia
- and -
Meer Care & Desai (a firm) & Ors Defendants
---------------------

Mr Blair QC, Mr Sullivan, Ms Brown, Mr Evans and Mr MacDonald (instructed by DLA

Piper) for the Claimant
Mr Head and Mr Kramer (instructed by Reynolds Porter Chamberlain) for Mr Iqbal Meer a
partner in the First Defendant
Mr Croxford QC and Ms Stanley (instructed by Barlow Lyde & Gilbert) for the Second and
Eighth Defendants
Mr Veen (instructed by Direct Public Access) for Mr Naynesh Desai a partner in the First
Defendant
Mr Bourne (instructed by Bray Walker) for the Fifth Defendant
Mr Fenwick QC and Ms Day (instructed by Barlow Lyde & Gilbert) for the partner in the
Second Defendant

Hearing dates: 31 October 2006 – 22 November 2006, 29 November 2006 – 14 December 2006
(sitting as Special Examiner at the High Court Lusaka), 11 January 2007 – 27 February 2007
---------------------
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this
Judgment and that copies of this version as handed down may be treated as authentic

..............................
MR JUSTICE PETER SMITH
Peter Smith J :

INDEX
A INTRODUCTION SECTION

89
Paragraph 1 The Case
3 Details of Defendants
11 Why the action is brought in London
34 Other Proceedings

B ZAMBIA – SOME POINTS TO NOTE

46 The Allegations in their financial context

C PROCEDURAL MATTERS

57 Unusual acquisitions
59 The President’s clothes

D ZAMTROP CONSPIRACY GENERAL MATTERS

90 Burden of Proof
98 How the conspiracy worked
107 Events that are not coincidental
115 MOU
120 AFSL obtains a licence

E OPENING OF THE ZAMTROP ACCOUNT

127 Formalities for Zamtrop Account

139 Finance Charter 1970
145 Significance of Finance Charter

F CREDITS TO ZAMTROP ACCOUNT

161 Transfers into and out of the Zamtrop Account: Systems and Wilbain
172 Budgetary Approval
204 Further transfers out of the Zamtrop Account

G EVENTS LEADING TO DISCOVERY

218 Open Pandora’s Box and take the money

222 FJT’s Presidency Ends

H CRITICISMS OF AGZ’S EVIDENCE

245 Mr Hamunjele
258 Allegations made about veracity of Third Parties

I ZAMTROP ACCOUNT MONIES ARE GOVERNMENT MONIES

90
277 Purposes for which payments used
291 Permase General

J ACCESS FINANCIAL SERVICES LIMITED (AFSL)

307 Enock Mwale

K LEGAL ISSUES

314 Conspiracy
330 Breach of fiduciary duty
332 Dishonest assistance
372 Limitation
376 Limitation generally

L INDIVIDUAL DEFENDANTS: VARIOUS ISSUES

427 Xavier F Chungu (XFC) (D7)

441 Dr Chiluba (FJT) (D3)
472 Stella Mumba Chibanda (SC) (D6)
486 Faustin Kabwe (FK) (D9)
503 Aaron Chungu (AC) (D7)
504 Francis Kaunda (Francis K) (D11)
519 Irene Kabwe (IK) (D10)
528 Boutique Basile (Basile) (D12)
541 Iqbal Meer, Naynesh Desai and Meer Care & Desai (IM, ND & MCD) (D1)
544 Churchill Hotel Agreement
593 Harptree Holdings Ltd
604 Further evidence of dishonesty
619 Blue Card warnings
644 Naynesh Desai (ND)
680 Knowing receipt where no beneficial receipt
685 Cave Malik (CM) Bimal Thaker (BT) and Bhupendra Bhailal Thaker (BBT) (D2)
716 Claims against BT, BBT and CM
719 Background BT
724 Cave Malik & Co London (CM)
753 Commencement of association with FK/AFSL
765 CM begins to receive Zamtrop monies
770 Receipts from Redcliffe/Shansonga
799 ZCCM Consultancy
813 Deception of Habib Bank
823 BT Changes His Story
836 Office of President Payments (OOP)
862 Cash Payments of £30,000 to FJT
866 Payments 2002
869 Conclusion as regards BT
874 Quantum against BT

91
M BBT/CM

876 Two issues

N ATAN SHANSONGA (AS) (D5)

893 Claims against AS

895 Brief summary of claims
904 AS’s Case
905 A number of preliminary observations
909 GT’s evidence concerning AS’s receipts and expenditure
911 Basis for AS’s involvement
918 AS’s fundamental credibility failing
926 Redcliffe
931 AS’s failure to keep records
938 Burden of Proof
949 AS comments on evidence generally
960 Zambian Lifestyle Yardstick
964 Payments to Stella Chibanda
969 Payments to CSW – Bob Standaert
974 Payments to Professor Mweene
975 Purchase of Motor Vehicles
984 Payments for School Fees etc
990 Credit Card Expenditure
1001 Other Credit Matters
1003 DGH Poly Products
1026 Conclusions as regards AS

O MOFED

1038 AGZ’s Case

P THE BK CONSPIRACY

1056 Background
1060 Examination and Effect of Documents
1072 Fate of Government monies paid to ABN-AMRO and KBS accounts
1074 Payments to XFC
1075 Meer Care $1,299,456.70
1080 Payments from KBC Account credited to Meer Care Ledger 3556/001
1085 CM $176,985 direct and $275,058 indirect payments from KBC account
1088 Indirect payments from the KBC account to CM via MCD
1089 $200,000 Payment by CM to KBC account

Q THE BK CASE: THE CLAIM AGAINST EACH DEFENDANT

1090 Mr Soriano

92
1095 Claim against XFC
1100 Claim against FJT
1102 Claim against SC
1104 Claim against FK
1108 Claim against IM/MCD
1114 Claim against BT/CM/BBT

R CONCLUSION

Zamtrop Conspiracy Liability

1120 XFC
1122 FTJ
1123 SC
1124 FK
1125 AC
1126 Francis K
1127 IK
1128 Basile
1129 IM/MCD/ND
1130 BT/CM/BBT
1131 AS

MOFED Claim

1132 AS

BK Conspiracy

1133 Soriano, FJT, XFC, SC and FK

1134 IM, MCD and ND
1135 BT, CM and BBT
1136 Harptree Credit

S FINAL NOTES

(A) INTRODUCTION SECTION

THE CASE

1. In this action the Attorney General of Zambia (“AGZ”) for and on behalf of the
Republic of Zambia claims to recover sums which were transferred by the Ministry of
Finance (“MOF”) between 1995 and 2001. The money in question was transferred on
the basis that it was required to pay debts owed by the Government. It is acknowledged
by the Claimant (“AGZ”) that some money was used in that way but most of it was not.

93
 It is alleged that very large sums were diverted away for private purposes for various of
the Defendants and he seeks to recover these sums from the Defendants.

2. The case falls into 3 distinct parts. The first arises out of the transfer of about
$52,000,000 from Zambia to a bank account operated, it is alleged, outside ordinary
governmental processes called the Zamtrop Account held at Zambia National
Commercial Bank Limited (“ZANACO”) in London. This has been called throughout
the proceedings “The Zamtrop Conspiracy”. The second claim relates to a UK
registered property company called MOFED Ltd owned by the Zambian Government.
This has been known as the “MOFED Claim” and relates solely to the Fifth Defendant
Atan Shansonga (“AS”). It is a claim for breach of fiduciary duty on the basis that a
consultancy agreement was improperly obtained by him in relation to the letting of the
property owned by MOFED which provided for him to receive £100,000 per annum.
The third related to payments of about $20,000,000 made by Zambia pursuant to an
alleged arms deal with Bulgaria and paid into accounts in Belgium and Switzerland at
least some of which funds found their way to London. This claim has been known
throughout the litigation as “the BK Conspiracy”.

1.

WHY THE ACTION IS BROUGHT IN LONDON

2. The proceedings were commenced in the Chancery Division in London by the issue of a
claim form on 6th October 2004. That has undergone a number of amendments
including one in respect of a claim called “the Picture Claim” in the closing submissions
before me.

3. AGZ applied for and obtained a freezing order before me on 24th November 2004.
Subsequent further freezing orders were made in early 2005.

4. The claims against the Belgian Defendants (i.e. those referred to in paragraph 9 above)
proceeded as I said in August 2005 and were stayed under the terms of a consent order
dated 30th August 2005.

5. The other Defendants to the action were not involved in that part. The consideration of
the remainder of the claims was first raised at a Case Management Conference on 10th
October 2005.

6. AGZ considered it appropriate for these proceedings to be brought in the High Court in
London for a number of reasons. First it is alleged that significant Defendants namely
MCD, CM and AS were based in London and large amounts of the allegedly stolen
monies were passed through accounts held by them onward to other destinations both in
Europe and elsewhere. Accordingly AGZ concluded that the claims he brought were
centred in London. The correctness of that belief and its success is demonstrated by
virtue of the Belgian recoveries which provided a complete justification for this course
of action.

7. As Defendants are both Zambian based and UK based a decision would have to be made
as how to deal with that. Given the close nexus with London and the advantage of
having orders that could be enforced because they are made in an English Court rather

94
 than a Zambian Court AGZ also determined that it was appropriate that the proceedings
should be London based for that reason.

8. That could be seen to create an immediate difficulty as regards the Zambian based
Defendants. They are all charged with criminal offences arising out of the same subject
matter of this action. They have not yet been brought to trial in Zambia. They are
however all on bail the terms of which require them to surrender their passports. They
could not attend a trial in London as AGZ was (quite understandably) not willing to lift
the bail restrictions to enable them to attend such a trial. It should be pointed out that
XFC fled Zambia and his whereabouts are not known precisely but he is currently
believed to be in the Republic of Congo. That provides clear support for AGZ’s view
that it would not be appropriate to risk permitting any of the Zambian Defendants to
leave Zambia to attend. The Republic however permitted FJT to go to South Africa for
medical treatment.

9. That would then mean the trial if held in London could not be attended by the Zambian
Defendants in person.

10. Accordingly FJT, SC, AC, FK and Francis K all issued applications challenging the
decision of AGZ to commence the proceedings in the English Court. It is worthy of note
that they did not do so on the basis that the proceedings had not been properly brought in
the High Court in London. Their challenge was based on two factors. First it was said
that they had a right to attend their trial in person and were not being given that
opportunity because they would not be allowed to attend in London. Second it was
contended that the civil proceedings should be adjourned until after the criminal
proceedings were heard. The justification for this was that they would be required to
give evidence in the civil proceedings and thereby reveal matters which they would
deploy or not in the criminal case. Thus their right to silence would be infringed and the
prosecution would be given advance warning of what they would say or might say.

11. I heard their application and I rejected it. In so rejecting it I addressed their two
concerns in the following way. First I indicated that I would be willing to go to Zambia
as a Special Examiner so I could hear their evidence live in a court in Zambia. The rest
of the proceedings would take place via a live video link to Zambia. In addition they
would be provided with daily transcripts at the initial expense of AGZ. I accepted that
was not the best solution as the best solution would be for them to be at their trial all the
time. However that could not happen for the reasons set out above. Nor would it be
appropriate to have trial proceedings simultaneously against Zambian Defendants in
Zambia and London based Defendants in London arising out of the same dispute.
Nobody argued against that point.

12. In respect of their privilege against self incrimination issues I directed that the
proceedings be ring fenced. By that I directed that the material deployed in the trial
before me and the evidence given and the arguments arising out of it would not be
disclosed to any other person or used by AGZ for any purpose in the criminal or other
proceedings without my permission.

13. To aid that AGZ gave undertakings and waived any immunity that he might have in
respect of enforcement of those undertakings and unconditionally submitted to the

95
 jurisdiction of this court for enforcement of any breach of the undertakings. In addition
he undertook to assist me as a Special Examiner in procuring witnesses that the Zambian
Defendants might wish to come to court. This was to deflect an argument that AGZ
would “hide” witnesses from the Defendants.

14. The Zambian Defendants appealed that decision to the Court of Appeal which dismissed
their appeal. In so dismissing the appeal the Court of Appeal noted “[the Defendants]
…. accept that there is no question of the civil proceedings taking place wholly in
Zambia and it follows that they accept, in my judgment properly and correctly, that
the civil proceedings should take place in England”.

15. That is an important point to note for this reason. The Zambian Defendants have in the
press in Zambia intimated that in some way the proceedings before me and my sitting as
a Special Examiner in Zambia are unconstitutional as regards Zambia, an infringement
of Zambia’s sovereign rights and an attempt by the former colonial power to impose its
will upon the Zambians.

16. In addition (somewhat belatedly) on 16th June 2006 they petitioned the High Court of
Zambia seeking a stay of the proceedings before me (by means of inter alia injunction
against AGZ). This course of action was taken over 20 months after the proceedings had
been initially commenced, after they had served Defences in this action, had challenged
various procedural matters in this court unsuccessfully and in the Court of Appeal and
after several Case Management Conferences had taken place to address the trial in
London.

17. The petition was adjourned on 9th October 2006 by Mr Justice Mwanamwamba who
gave directions for filing of submissions and indicated he would give his decision on
31st January 2007. That hearing did not take place and a hearing in November 2007 has
now been fixed. It is now of academic relevance as my judgment will have been
delivered before the hearing.

18. The statement of the Zambian Defendants to the public in Zambia is one of the many
instances of them misleading the public in Zambia for their own purposes. As I have set
out above when they challenged my decision to make the ring fencing order it was never
suggested that the proceedings were inappropriately brought in London. Nor has it ever
been suggested when they were participating in these proceedings that it was
inappropriate for me to sit as a Special Examiner in Zambia. Indeed the Zambian Law
Society has confirmed that it is appropriate for me so to act and that it has occurred in a
number of cases previously.

19. Special arrangements were made for video links to be set up to enable them to hear all
procedural applications until trial. The Zambian Defendants attended the first of those
but the video link failed. For reasons which baffle me they decided that they would not
go to the British High Commission where a back up video link was set up. Thereafter in
June 2006 (coincidental with their petition) they wrote to me saying they had
“discontinued participation” in this action. There is of course no power on the part of a
Defendant to “discontinue participation” in proceedings. The facilities in Zambia were
nevertheless made available for them but they chose not to attend for no- justified
reason.

96
20. They were provided with all the documents for the trial in advance of the trial. They
were provided with daily transcripts up to a certain date. Finally arrangements were put
in place for a property that was under restraint in Zambia to be realised to enable them to
pay their lawyers. Despite being afforded that opportunity they took no steps to realise
the property in question (Serioes Farm). The reason for this was that they had made a
decision not to play any role in the proceedings once their attempt to remove themselves
had failed. The fact that funds could be made available is well demonstrated by the
orders I made during the course of the trial in favour of AS to permit him to arrange for
the sale by De Garnier Holdings Limited of shares it oened in a Zambian Hydro
Electrical company and for Mr Shansonga to have access to those funds not only to
defend himself but to pay his living expenses. Such a course of action was open to all
the other Zambian based Defendants but they chose not to avail themselves of it. They
could have applied for public funding (as AS did) but they chose not to do so.

21. When the trial commenced FJT broke the terms of the ring fencing order which was
created (inter alia) for his benefit by issuing a press release with large numbers of
documents the subject of the ring fencing order attached to it. Similarly the Zambian
based Defendants gave statements to various newspapers in Zambia alluding to such
material. Such delivery was in a selective way and was once again a breach of the ring
fencing order which was put in place for their protection. Accordingly I removed their
right to transcripts unless they attended court in Zambia personally on a daily basis to
collect the transcript and signed a confidentiality agreement. After that requirement
none of the Zambian based Defendants attended to obtain the documents. Unfortunately
towards the end of the hearing in Zambia a member of the AGZ’s chambers released
some transcripts to a representative of the Zambian based Defendants and those
transcripts were then promptly published in a selective way in the press again.

22. The actions of the Zambian Defendants in this regard and their statements to the
Zambian people have been deliberately designed to raise irrelevant matters and to avoid
dealing with the claims against them on the merits. I am quite satisfied that they have
had the fullest opportunity to present a case against the claims brought against them but
they have chosen for their own reasons not to do so. As this judgment develops it will
be seen self evidently why they have chosen not to participate. It has nothing to do with
the supposed reasons put forward by them which as I have said earlier in this judgment
were not reasons put forward when they were represented in the courts in England. It is
I regret to say a further deception on the people of Zambia perpetrated by these
Defendants.

23. In addition to the recovery as against Jarban, Belsquare, Cracco and Standaert on the
opening of the trial I ordered that MCD pay to AGZ a sum of approximately $900,000
which they were holding in their client account credited to the name of Harptree
Holdings Ltd. The only other potential claimant for the control of Harptree was FK and
he made no claim. These monies came from the BK account held at KBC Belgium. The
Harptree ledger at MCD recorded receipt of $1,000,000 from the KBC account on 22nd
December 2000 and 23rd March 2001.

24. No credible reason has been put forward by the other non Zambian non participating
Defendants as to why they have played no part in these proceedings.

97
(C) PROCEDURAL MATTERS

1. The trial lasted some 51 days. In order to achieve a realistic trial very tight Case
Management timetables were imposed. They have been mostly met. I have been greatly
assisted by the response of the lawyers of all parties to the timetable that was imposed
upon them. It meant that this action was brought to trial in less than 2 years.

2. The logistics of the move to Zambia were very demanding. The trial bundles extended
to 110 lever arch files. They had to be transported to Zambia (including my own and my
own notes). That worked mostly satisfactorily. The video links were not the best.
Whilst they inhibited cross-examination the main witnesses who were cross examined
were either in the AGZ’s case brought from Zambia or were the Defendants themselves.
The Zambian based Defendants chose not to avail themselves of the expensive
procedures that were put in place solely for their benefit. That is a matter of regret.
However as I said to them on numerous occasions in correspondence it was up to them
to decide whether or not they appeared. I can say however that in my view there was no
justified reason for them not to appear. The reasons they portrayed to the press in
Zambia are in my opinion bogus. This was their opportunity to put their case openly and
without fear. They chose not to do so.

3. Finally in the context of the logistical exercise the organisation of the movement of my
papers and the security aspects put a heavy workload on my Clerk Miss Supriya Saleem
and she too contributed significantly to the success of bringing this case to trial.

4. With all this assistance I was able to overcome the general apparent inability of Judges
to case manage cases (see the comments attributed to David Gray of DLA in The
Lawyer 9th October 2006).

5. The trial opened in London on 31st October 2006. I sat as a Special Examiner in
Zambia from 29th November 2006 to 15th December 2006 and resumed the trial in
London from 11th January 2007 to 27th February 2007.

6. I heard 47 witnesses of fact from the Claimants. The participating Defendants gave
evidence but called nobody else to support their case. In addition Grant Thornton
(“GT”) were retained by AGZ and CM as a joint expert to advise on tracing of monies
from MOF into the Zamtrop account and its subsequent disbursement. That exercise
was extremely complicated and difficult. I am grateful for the results because it
shortened what was undoubtedly an area which could have taken an incredible amount
of time. It meant that there has been substantial acceptance of the result of that exercise
so that unusually in a case like this there is no serious dispute over figures. The limited
nature of the retainer should be noted. They were not retained by the other parties. Nor
were they retained (for example) beyond the Zamtrop conspiracy. They did not
investigate either the OOP payments or the Permase General Account. Their report
establishes that the bulk of the monies received into the Zamtrop account can be traced
back to MOF. They have also substantially traced the funds out of the Zamtrop Account.
AGZ’s concession limiting their claim to traced amounts also extends to sums which he
can establish are Government monies. Whilst his argument on a statutory right has failed
( see paragraph 160 below) he has persuaded me that on the balance of probabilities
some sums which were paid into the Zamtrop Account are Government monies although

98
 they have not been successfully traced back to MOF in the GT Report (see paragraph
274 below).

7. The writing of this judgment has taken longer than I had hoped but the detail of the
case and the submissions required careful consideration. I had to beware rushing to
judgment in case that attracted criticism whether valid or not see Baigent & Leigh v
Random House [2007] EWCA Civ 247.

8. When I attended Zambia there was considerable interest unsurprisingly. As the hearing
was in camera I issued a press release setting out the goal behind the hearing. As I have
referred to above the Zambian Defendants broke the ring fencing order which was put in
place for their own benefit. As the evidence has developed it has become clear to me
given the extent of the participation of those Defendants in the trial that there is no
reason why this judgment should not be released immediately. There are good reasons
why it should be made public in Zambia as soon as possible. The record needs to be set
out fully so that the people in Zambia can see what has gone on in the past in relation to
the governance of their country and the custodianship of assets that the Government has
to apply for the benefit of its people. This case has shown a quite cynical abuse of office
by senior officials in the former Zambian Government namely FJT and XFC. The
corruption extended to other officials as this judgment will show.

UNUSUAL ACQUISITIONS

9. The most serious revelation in this case is the cynical and unjustified misappropriation
of funds for the private purposes of Government officials. I set out below the types of
expenditure to which I am referring. Not all the Defendants were aware of these
purchases save FJT, XFC and FK but in one way or another they have participated in
some of the acquisitions. I set out next in tabular form some examples.

UNUSUAL ITEMS (SOME EXAMPLES)

ITEM RECIPIENT AMOUNT SOURCE

Clothes (Basile) FJT, XFC $1,029,400 Zamtrop
($471,597 is unaccounted
for)
Clothes (Basile) FJT, XFC $180,000 CM
Cash FJT £30,000 Zamtrop (collected by BT)
12B Serval FJT $450,000 CM
Road
Various cash FJT or at his direction $308,255.54 Zamtrop
payments (annex 49) Payments to
FJT’s children or for
education or
accommodation for them
Cash FJT (the Picture Payments) $64,726.58 Zamtrop (3rd party
(annex 50) credits)
Cash Former Chief Justice $91,664.01 Zamtrop

99
 UNUSUAL ITEMS (SOME EXAMPLES)

ITEM RECIPIENT AMOUNT SOURCE

Ngulube & family
Cash Churches in America at $179,000 Zamtrop
direction of FJT
Cash FJT (more details set out $660,000 Standaert via Zamtrop
below)
Repayment of XFC £341,520 AS/Redcliffe
credit card
debts for
personal
expenditure
Payments for XFC £181,000 AS/Redcliffe
school fees
Cash XFC (taken from Zamtrop $371,149.80 Zamtrop
account in person)
Cash XFC (annex 53) (delivered $453,940 Zamtrop
by Nkumbula to XFC or
wife)
Cash XFC (delivered by AS) $250,000 Zamtrop
Cash SC $35,000 AS/Redcliffe
Payment for FJT and others £295 AS/Redcliffe
spectacles
27/5/98
Cash Professor Mweene £5,400 AS/Redcliffe
Cash Professor Loveless (spouse $10,000 AS/Redcliffe
of Professor Mweene)
Honda XFC BF590,934 AS/Redcliffe/Standaert
motorcycle and
clothing
Beauty Therapy Rita Parkinson £6,295 (plus AS
Course accommodation)
Jewellery (Fine XFC $30,000 Zamtrop
Jewellers
Washington
GT34)
Jewellery XFC via Barclays Premier £1,319.71 AS
card in name of AS
12/10/98

10. The above items are not exhaustive. I have chosen those because of the nature of the
items in some cases and the size of the items. One sees a similar pattern of unusual
expenditure in respect of disbursements made by XFC in the following table.

100
 XFC DISBURSEMENTS (SOME EXAMPLES)

AMOUNT DATE PURPOSE SOURCE

£45,000 26/06/00 Used by XFC to repay a temporary loan and Zamtrop
payments for Beauty Kaluba and his children
$25,000 26/06/00 Cash payment to BB Mphande Zamtrop
$50,000 08/01/99 Cash payment to Moses Katumbi Zamtrop
$30,000 28/03/01 Mrs C Willems (Mrs Standaert) Zamtrop

THE PRESIDENT’S CLOTHES

11. The President (unlike the Emperor) needs to be clothed. FJT was known to be a stylish
dresser “His suits speak of affluence, yet he presides over a country with millions
barely scraping a living… But President Chiluba’s suits are understood to be tailored
by top designers in France and Italy… How much is spent on these clothes is a closely
guarded secret. But many ordinary Zambians speculate that the figure has to be a
mind-blowing one… It is not clear how many suits he has. But few people, even his
closest aides, can remember seeing Mr Chiluba in the same suit, or shirt, twice”.
(BBC Programme)

12. I saw some of the clothing at court. The expenditure with Basile amounts to $1,029,400
of which Basile attributed 99% to FJT. The items seized by the Task Force were
considerable. First there were 349 shirts. A large number of these bore the FJT
monogram on them and they were from virtually every designer outlet. Second there
were 206 jackets and suits. A large number of these were from Basile bearing the FJT
monogram. Third there were 72 pairs of shoes. A large number of these were hand
made by Basile with the FJT logo. All were for FJT’s unique personal specification
(high heels). Many of them were in their original shoe covers and had not been used.
There were a large number of other items. The full list can be found in bundle 17.2 page
217 et seq.

13. After the actions in respect of the Zamtrop account were revealed in mid 2002 the
current President made a statement to Parliament on 11th July 2002 setting out what he
then understood to be the extent and nature of the allegations against the Defendants
(and others). This is not of course evidence and will not be treated as such by me. AGZ
has recognised this throughout the trial. The case has been decided on the evidence put
before me.

14. The receipt of the clothing by FJT plainly required an explanation. If one is generous
and assumes that FJT received goods from Basile only (and I use that word in the
context of this case) to the dollar equivalent of $557,803 it calls out for an immediate
explanation by him. It reflected as I have said over 5 times the totality of his salary
when he was in office for 10 years. I have already commented that there is nothing from
his pre Presidential lifestyle to suggest he had wealth and there appears to be nothing in
his post Presidential lifestyle to suggest he has wealth. As the former President of a
country as poor as Zambia the people were entitled to an explanation.

101
15. This trial was the place where FJT could have vindicated himself. He has totally
absented himself from the trial.

16. I have had to discern what he said about this allegation. On 14th July 2002 FJT issued a
press statement in response to President Mwanawasa SC address. In the President’s
address (after referring to payments to various of FJT’s children and the former Chief
Justice Ngulube) he made reference to the payments of $1,100,000 to Basile describing
them as “the former President’s tailors”.

17. The response does not even deal with this clothing issue. FJT asserts that the Zamtrop
account was operated under a document called the Finance Charter. This is correct as it
will appear in this judgment. He went on to say that the account shows large numbers of
gifts being credited to the account (which is incorrect).

18. None of these payments can be attributed to any gifts even if there were such gifts.
Grant Thornton has traced $879,400 of the $1,029,400 paid to Basile (H4/13 of their
report). The balance is due to a difference of methodology. The larger figure is traced
back to MOF accounts. The relevant figure therefore exceeds the identified value of the
clothing received by FJT. His statement in his press release insofar as it suggests the
clothing was received via the Zamtrop account fed by gifts is a blatant lie.

19. He had a further opportunity to make the position clear when he was interviewed by the
Task Force on 30th July 2003. This interview took place after the revelation in respect
of the Zamtrop account in the local newspaper “The Seer” (March 3-9 2003) under the
byeline “A Twisted Tale”. This was a less detailed analysis of the claims. The more
detailed analysis was in the Post on 25th June 2002 under the heading “Analysis of
Chiluba’s Matrix of Plunder” this detailed the large amounts of money (including the
clothing payment) received by FJT and his family.

20. He was questioned about the Basile payments:-

“Question: How do you explain the payments to your children

and Basile Boutique?

Answer: The Controlling Officer of the account Mr Chungu is

in a better position to explain

Question: Did you receive any money through the Zamtrop

account in London?

Answer: Only the Controlling Officer would know”

21. The people of Zambia deserve better from their former President. His failure to explain
himself is shameful. They should take heed of my observation in paragraph 467 below.

22. There are other payments. I have already referred to the Picture Payments. I have
already referred to the £30,000 cash payment he obtained from BT. I have already
referred to the $179,000 paid from the Zamtrop account to churches in America.

23. The final payment of relevance at this part of the judgment is $660,000 transferred in

102
 July – September 1996 from the Zamtrop account to Standaert. The disbursement of this
money is quite extraordinary. GT have only been able to trace the $300,000 paid on 31st
July 1996 (GT5) to MOF sources. There is no evidence suggesting any other source of
the balance of the funds. All the payments came out of the Zamtrop account direct to
Standaert.

24. Standaert provided a witness statement dated 27th July 2005 iin the part of the
proceedings brought against him. In that witness statement he dealt (inter alia) with the
disbursement of these monies (annex 80 to the Re Re Re Amended Particulars of Claim)
(“RRAPOC”). First he incurred $652,968 on purchases for FJT’s second election
campaign. These are items such as T-shirts, baseball caps and the like.

25. Standaert received a further payment amounting to $65,000 between 26th August 1999
and 30th March 2001. Of this figure GT trace $35,000 via Standaert’s wife Ms
Williams. The first $30,000 was used to acquire 1200 bottles of Denis Baillet
Millennium 2000 champagne (document E1 43.21). He presumed they were for use in
official celebrations but there is no evidence to show that that was the case. The balance
of the monies was used in travel expenses by XFC and clothing purchases by him.

26. On 5th September 2000 Standaert received $15,000 which he spent on buying a fish
skinning machine for XFC. He apparently received this in cash although his witness
statement acknowledges he received it from MCD. According to their record on 5th and
6th September XFC sent instructions to remit $15,000 to Standaert but the method of
transfer was by payment into an XFC account at a bank in Brussels. Those monies were
transferred that way. They are to be found in the MCD ledger no 2535 with the
description “Frank Chungu” (this is XFC). That money derived from GT traces 36 – 38.
It follows that on this analysis XFC spent $15,000 of government money buying a fish
skinning machine.

27. All of these cried out for an explanation. We have had none from XFC because he has
not participated anywhere in the proceedings and indeed as I have said has fled Zambia.
FJT did not deal with the matters that I have referred to above in any of his statements.

28. Before he “discontinued” participation in these proceedings FJT served a Defence dated
13th February 2006. Significantly that document is irregular because it does not have a
Statement of Truth. I can well understand why such a statement is missing. He
generally denies all of the allegations and in paragraphs 11 and 12 refers to the Zamtrop
account as follows:-

“The Zamtrop Account as it is called in this claim, historically is

an account set up by the Government of Zambia in or about
1963 for the operations of the Zambian Intelligence Services.
This account was operated overseas so that in the event of
internal conflict there would be an external account for use to
fund operations in times of emergency. This account was also to
be deployed for certain Defence and security spending of a
highly classified nature. I do not accept that this account was
set up for the purposes of fraud. I as the President of Zambia
certainly did not authorise its use for anything else other than

103
 what it was created for. This was an account entirely under the
control of the intelligence service of Zambia within the
operational ambit of the Director General who enjoys wide
powers and discretion under Zambian law in matters
concerning national security”.

29. In paragraph 13 he lists (A11) the allegations that he says are made against him.

30. He did not plead to item C (the cash payment of £30,000 from BT). The Picture
Payments allegation is simply answered on the basis that the Zamtrop account had
private monies in it. He asserts he had personal money and the Zamtrop account was
administered for the purpose of disbursement of that personal money. I note the
following. There is no evidence which shows FJT remitted any such sums (just under
$200,000). He adduces no evidence to show he had such wealth. In that context his
affidavit of means is illuminating. Insofar as the payments can be identified as from 3rd
party sources the receipt of such monies is and the failure to declare them is plainly a
breach of the duties FJT owed to the Republic of Zambia. I will deal with this further in
the section dealing with the specific allegation against him.

31. He merely puts AGZ to proof of the transfer of $179,000 from the Zamtrop account to
churches in America. This is extraordinary as the evidence shows he directed the
payments. He denies receiving any benefit in respect of clothing via Basile (allegation
J). He “asked the Claimant to prove that I had anything to do with the allegations it
has made”. That is quite breathtaking. He has received clothing to the value of at least
$500,000. That clothing was clearly personal to him as can be seen from an examination
of the recoveries by the Task Force. It cries out for an explanation from FJT as to how
he had the wealth to spend such an extraordinary amount on clothing. This was his
opportunity when he was participating in the proceedings and the failure to deal with it,
is dishonest.

32. His reply in respect of election expenditure (allegation K) is “Mr Standaert has not said
that I instructed him to carry out this contract and I in fact did not authorise it and
had no knowledge of how it was awarded”. One wonders where he thought all the T-
shirts and baseball caps came from. This too is not believable.

33. I set these extraordinary activities out at this stage because they show that the Zambian
based Defendants clearly had very serious allegations made against them which required
an answer. Despite having a full opportunity to participate in this action they chose for
no honest reason not to participate. The inevitable conclusion is that they have not
participated because they have no answer to these transactions. That is important
because the transactions themselves and the silence from the relevant Defendants that is
strong evidence in support of AGZ’s claims. In addition given the nature of his office
and his professions of honesty and integrity FJT had to answer them. His excuses are
not acceptable and the people of Zambia should be aware of that.

34. The second reason why these transactions are relevant is that it provides the motivation
for the setting up of the Zamtrop account as I will set out further in this judgment. I am
satisfied that the Zamtrop account was set up primarily to steal Government money. It is
not that the Zamtrop account was set up legitimately and then used partially for

104
 illegitimate purposes.

35. I remind myself however that I must be careful in how I deal with evidence in the case
and the absence of Defendants. I have made clear to the parties that I must not allow
evidence against other Defendants when there is nothing to suggest they participated in
or were aware of the transactions in question, to be used against them. It is essential that
the role of all Defendants in the allegations is looked at individually and their actions
assessed in the light of their knowledge. I have been conscious of the need to be
discriminating in that respect, especially bearing in mind the serious nature of the
allegations. This is a point that is particularly important for the participating
Defendants.

36. Also in this context I am alive to the fact that the case must be proven against the
Zambian Defendants. The evidence led by AGZ has been subject to thorough testing
both by the participating Defendants and me. As a result of that as will be seen further
in this judgment the participating Defendants have raised matters which might amount to
a total Defence on the part of all Defendants to the claims brought by AGZ. They have
also raised matters which have reduced the amount of the claims AGZ seek to maintain.
Thus for example the case was opened on the basis that the Claimant was seeking all of
the sums identified in the witness statement of the main witness Mr Hamunjele. He
identified as claims sums in excess of the sums that can be traced by GT back to MOF or
other Governmental sources. By the time of their closing AGZ accepted that the ceiling
for any claim was those sums traced by GT. If the liability is limited to the individual
claims against individual Defendants the relevant sums are identified in volume H4 of
the GT’s report (as varied in the light of the evidence of Ms Pincott given when she was
recalled and the further calculation she provided after giving that evidence).

37. The headline figures are approximately $63,000,000 alleged to have been transferred
from MOF to bank accounts abroad namely in London, Belgium and Switzerland. In
each case the transfers were “allegedly” made under the cover of state security and the
MOF officials were persuaded to authorise the transfers on that basis that the purpose
was a legitimate purpose concerned with state security.

38. In respect of the Zamtrop account approximately $43,000,000 was paid in and only
$17,500,000 of that is accepted by AGZ as being paid to legitimate contracting parties.
In respect of the BK conspiracy the total amounts in Belgium and Switzerland (total
approximately $20,000,000) were diverted. AGZ contends that all Defendants are liable
to pay these headline figures as being parties to the two conspiracies to defraud the
Republic.

(K) LEGAL ISSUES

CONSPIRACY

1. AGZ in his closing (paragraph 177) acknowledges that the conspiracy claim contended
for is that of a conspiracy to use unlawful means. As set out in the RRRAPOC the
conspiracy caused loss to the Republic of Zambia by misappropriation of its monies and
to conceal the fraud and the proceeds of such fraud from it. It is alleged (and as set out
above I accept) the vehicle for the conspiracy to steal was the Zamtrop account or

105
 alternatively the monies taken from the Zamtrop account which AGZ establishes had not
been applied for any lawful purpose. It also extends to other monies which AGZ
establishes have come from Government finances and have not been applied for
Government purposes.

2. The leading authority on conspiracy in this area all parties agree is Kuwait Oil Tanker
Co SAK v Al Barder and Others [2000] 2 All ER (COM) 271 (CA).

3. The court summarised the principles of conspiracy as follows:-

“106. The judge held that all three defendants were liable for
the tort of conspiracy to injure by unlawful means. He held that
under English law they were parties to a single actionable
conspiracy wrongly to misappropriate the claimants' assets and
that the damage caused by that conspiracy extended to the
whole of the losses suffered by the claimants, save that Captain
Stafford was not liable for the losses before September 1986
because he did not join the conspiracy until then. Mr Brodie
submitted that the judge made a number of errors in his
approach to the principles governing the tort of conspiracy to
injure. He accepted that the tort of conspiracy is known to
English law, but submitted that it was subject to important
limitations.

107. It is common ground that there are two types of actionable

conspiracy, conspiracy to injure by lawful means and
conspiracy to injure by unlawful means. The first is sometimes
described simply as a conspiracy to injure and the second as a
conspiracy to use unlawful means (see eg Clerk and Lindsell on
Torts (17th edn, 1995) pp 1267–1268, paras 23–76). In our view
they are both conspiracies to injure and their ingredients are the
same, with one crucial difference. In both cases there must be
conspiracy to injure the claimant, but in the first case (in which
the means employed would otherwise be lawful) the
predominant purpose of the conspiracy must be to injure the
claimant whereas in the second case, although the defendant
must intend to injure the claimant, injury to the claimant need
not be his predominant purpose.

108. We shall treat them as different torts, although, as it seems

to us, they are better regarded as species of the same tort. It
matters not. For present purposes we would define them as
follows. (1) A conspiracy to injure by lawful means is actionable
where the claimant proves that he has suffered loss or damage
as a result of action taken pursuant to a combination or
agreement between the defendant and another person or
persons to injure him, where the predominant purpose of the
defendant is to injure the claimant. (2) A conspiracy to injure by
unlawful means is actionable where the claimant proves that he

106
has suffered loss or damage as a result of unlawful action taken
pursuant to a combination or agreement between the defendant
and another person or persons to injure him by unlawful
means, whether or not it is the predominant purpose of the
defendant to do so. We shall call them a 'lawful means
conspiracy' and an 'unlawful means conspiracy' respectively.

109. Those principles seem to us to be consistent with the

authorities, including in particular Lonrho Ltd v Shell
Petroleum Co  Ltd (No 2) [1981] 2 All ER 456, [1982] AC 173
and Lonrho  plc v Fayed [1991] 3 All ER 303, [1992] 1 AC 448,
which analyse the leading cases. (See also for example Rookes v
Barnard [1964] 1  All ER 367 at 400, [1964] AC 1129 at 1209
where Lord Devlin drew a clear distinction between the two
types of conspiracy.)

110. It is important to note that the tort of conspiracy to injure

by unlawful means is different in significant respects both from
the crime of conspiracy and from the law of contract. A
criminal conspiracy is in essence an agreement to commit a
crime and, as such, is complete when the agreement is made,
whether or not it is carried out. For this reason care must be
taken in considering decisions in criminal cases where (as here)
the question is whether the tort of conspiracy was committed.
Lord Diplock put it in this way in the Shell Petroleum case:

'Regarded as a civil tort, however, conspiracy is a highly

anomalous cause of action. The gist of the cause of action is
damage to the plaintiff; so long as it remains unexecuted, the
agreement, which alone constitutes the crime of conspiracy,
causes no damage; it is only acts done in execution of the
agreement that are capable of doing that. So the tort, unlike the
crime, consists not of agreement but of concerted action taken
pursuant to agreement.' (See [1981] 2 All ER 456 at 463, [1982]
AC 173 at 188.)

In that passage Lord Diplock appears to have been referring to

both types of conspiracy. The essence of the unlawful means
conspiracy is injury to the claimant as a result of an unlawful
act or acts where two or more people have combined to cause
the injury. It is not necessary that every overt act is done by
every conspirator, but the act must be done pursuant to the
conspiracy or combination.

111. A further feature of the tort of conspiracy, which is also

found in criminal conspiracies, is that, as the judge pointed out
(at p 124), it is not necessary to show that there is anything in
the nature of an express agreement, whether formal or
informal. It is sufficient if two or more persons combine with a

107
common intention, or, in other words, that they deliberately
combine, albeit tacitly, to achieve a common end. Although civil
and criminal conspiracies have important differences, we agree
with the judge that the following passage from the judgment of
the Court of Appeal Criminal Division delivered by
O'Connor  LJ in R v Siracusa (1990) 90 Cr App R 340 at 349 is
of assistance in this context:

'Secondly, the origins of all conspiracies are concealed and it is

usually quite impossible to establish when or where the initial
agreement was made, or when or where other conspirators were
recruited. The very existence of the agreement can only be
inferred from overt acts. Participation in a conspiracy is
infinitely variable: it can be active or passive. If the majority
shareholder and director of a company consents to the company
being used for drug smuggling carried out in the company's
name by a fellow director and minority shareholder, he is guilty
of conspiracy. Consent, that is agreement or adherence to the
agreement, can be inferred if it is proved that he knew what was
going on and the intention to participate in the furtherance of
the criminal purpose is also established by his failure to stop the
unlawful activity.'

Thus it is not necessary for the conspirators all to join the

conspiracy at the same time, but we agree with the judge that
the parties to it must be sufficiently aware of the surrounding
circumstances and share the same object for it properly to be
said that they were acting in concert at the time of the acts
complained of. In a criminal case juries are often asked to
decide whether the alleged conspirators were 'in it together'.
That may be a helpful question to ask, but we agree with
Mr Brodie that it should not be used as a method of avoiding
detailed consideration of the acts which are said to have been
done in pursuance of the conspiracy.

112. In most cases it will be necessary to scrutinise the acts

relied upon in order to see what inferences can be drawn as to
the existence or otherwise of the alleged conspiracy or
combination. It will be the rare case in which there will be
evidence of the agreement itself. Curiously this is such a case,
although it appears to us that in crucial respects it is also
necessary to draw inferences as to the extent of the agreement
from what happened after it. Thus the essential nature of the
agreement can be seen in part from the evidence of Mr Al
Bader and Captain Stafford, although, especially in the case of
Captain Stafford, the extent of the agreement will depend upon
inferences to be drawn both from the surrounding
circumstances and subsequent events.”

108
4. Thus AGZ must establish the following 3 matters taking into account items (4) – (7).

(1) Each conspirator was a party to the alleged combination or common design.

(2) Unlawful means were used.

(3) There was an intention to injure but that need not be the dominant purpose.

(4) It is not necessary to show that there is anything in the nature of an express
agreement whether formal or informal. It is sufficient if two or more persons
combine with a common intention albeit tacitly to achieve a common end.

(5) It is usually quite impossible to establish when or where there was an initial
agreement and when or where other conspirators were recruited.

(6) Participation in a conspiracy is infinitely variable:- it can be active or passive. Also

consent can be inferred if it is proved that a person knew what was going on and thus
the intention to participate in the furtherance of the criminal purpose is also established by
his failure to stop the unlawful activity. I observe that in my view that is particularly
important as regards MCD, CM, AS.

(7) Scrutiny of all acts relied upon in order to see what inference can be drawn is
essential. I have already emphasised in this judgment of the need to consider the actions of
all the Defendants separately in the light of their knowledge and be wary of applying
hindsight.

5. The Court of Appeal rejected the submission that intention to injure had to be proved
and could not be inferred from the acts themselves (paragraph 120). In rejecting the
submission they said this:-

“In the case of most conspiracies to injure by tortious means it

will be clear from the acts of the conspirators that they must
have intended to injure the Claimant. In the case of a
conspiracy to defraud by wholesale misappropriation it would
be absurd to argue that the conspirators did not intend just
that”.

6. Further at paragraph 121 they said this:-

“On the Judge’s findings of fact the Defendants’ principal

purpose was no doubt to line their own pockets, but they cannot
be heard to say that they did not intend to injure the Claimants
or that their acts were not aimed at the Claimants”.

7. The next point to observe is that if a party is found to be a conspirator he does not need
to be aware of all the circumstances of each wrongful act done pursuant to that
conspiracy but he is jointly and severally liable in damages for all losses caused by the
conspiracy to which he is a party. This is established again in the Kuwait case from

109
paragraphs 132-134 as follows:-

“132. For these reasons we reject the submission that the

claimants were not entitled to claim damages for conspiracy, but
we stress that that does not mean that their case must not be
properly proved. That involves proving each of the elements in
the tort, including the nature of the agreement, the unlawful
means alleged, each unlawful act relied upon as causing loss
and the fact that each such ”

[2000] 2 All ER (Comm) 271 at 320

act was carried out pursuant to the conspiracy. The authorities

show that the claimants must indeed prove those facts (see eg
Bird v O'Neal [1960] 3 All ER 254, [1960] AC 907 and Huntley
v Thornton [1957] 1 All ER 234, [1957] 1 WLR 321). In the
former case Lord Tucker said that the defendants might have
been held liable—

'by looking to see what part, if any, each appellant had played in
connexion with each specific incident when threats or
intimidation had been used and then considering whether such
part necessarily compelled the inference that the particular
respondent was party to a conspiracy to use unlawful means to
further the object of the picketing and thereby create a
nuisance.' (See [1960] 3 All ER 254 at 260, [1960] AC 907 at
920–921.)

In Huntley v Thornton Harman J said:

'No doubt it is not necessary that all the conspirators should

join at the same time, but it is, I think, necessary that they
should know all the facts and entertain the same object.' (See
[1957] 1 All ER 234 at 251, [1957] 1 WLR 321 at 343.)

133. It does not follow from the above that each defendant must
personally take part in every act so long as it is done pursuant to
the agreement. Moore-Bick J put the matter in this way (at
p  126):

'Of course, as in any case of this kind, it is necessary to examine

the evidence with care to see whether each defendant was
involved in each fraudulent transaction, but once one reaches
the conclusion that the defendants combined to steal from their
employer by whatever means might present themselves, the
question in relation to any particular scheme or enterprise in
which only one or some of them can be shown to have directly
participated is whether that enterprise fell within the overall
scope of their common design. If several people agree to enable

110
 each other to steal from their employer, lending their support in
different ways at different times and taking different shares of
the proceeds (or even each retaining for himself what he takes),
each of them is party to the agreement pursuant to which all the
thefts take place. In those circumstances there is in my
judgment no need for each to be fully aware of the
circumstances of each theft in order for him to be liable as a
conspirator provided that the theft in question falls within the
scope of their agreement.'

We agree with those conclusions but stress the need for proof to
the relevant standard at every stage.

136. The judge approached the matter correctly in principle. He

considered what agreement was made at the outset, partly by
reference to the evidence about what was said at the time and
partly by inference from what happened thereafter. He then
asked himself whether each of the transactions which made up
the four schemes was carried out pursuant to the conspiracy
and concluded that the defendants were all parties to a single
actionable conspiracy. He then considered whether Captain
Stafford at any stage left the conspiracy. In our judgment that
was the correct approach, although (as explained below) we
have reached the conclusion that in one important respect the
judge did not correctly identify the true nature of the conspiracy
and that the question whether Captain Stafford left the
conspiracy did not have to be considered. We do not consider
that there was any unfairness in the way that the judge
approached the case or, indeed, in the way in which it was
advanced at the trial. The defendants had no doubt at each
stage what case they had to meet.

8. It is possible that a party can withdraw from a conspiracy but they may still be a
conspirator because they participate in a cover up (paragraphs 147-148 and 154-155) as
follows:-

“147. He considered the principles relevant to withdrawal from

a conspiracy of this kind (at pp 136–139) and then concluded
that Captain Stafford had not effectively withdrawn in these
terms (at pp 139–140):”

'There is no evidence that Captain Stafford received any money

after he left Kuwait other than the sum of $US25,000 which he
was paid for the assistance he gave to KOTC at the time of the
Iraqi invasion, but he has continued to maintain close links
with Mr Al Bader who has funded his Defence to this action
and it would hardly be surprising if someone with as much

111
knowledge as he had of a dishonest conspiracy continued to
receive some benefits from it. The evidence does not enable me
to make a finding that he has done so, but equally, I am unable
to go so far as to make a positive finding that he has not. The
frauds based on falsified Brown & Root invoices continued for
a few months after his departure, but they were merely a
continuation of a method which had already been in use for a
year and did not involve any departure from the plan as it had
by then developed. The main frauds which occurred after his
absence involved the purchases of additional second-hand
tankers and the four new buildings (scheme II) and the
diversion of the war risk premium rebates to Clarksons (scheme
III). All

[2000] 2 All ER (Comm) 271 at 326

those frauds were within the contemplation of the original

conspiracy, but even if there were any doubt about that, they
were certainly within the contemplation of the conspiracy as it
had developed by September 1989. It is not necessary for
Captain Stafford to have taken an active role in order for him to
have remained a party to the conspiracy, much less for him to
remain liable for the loss which the plaintiffs have suffered as a
result of its continuing implementation by Mr Al Bader and
Mr Qabazard. It is sufficient that he should have continued to
play a part by keeping silent and later by helping to protect
Mr Al Bader and Mr Qabazard when Mr Al Roumi's
investigations began, despite the fact that he had the means to
disclose both the existence of the conspiracy and much of what
had been done pursuant to it. For these reasons I have reached
the conclusion that Captain Stafford did not effectively
withdraw from the conspiracy when he retired to Australia. His
active participation between September 1986 and September
1989 together with his subsequent silence remained as one of
the effective causes of the loss which the plaintiffs suffered as a
result of its continued implementation by Mr Al Bader and
Mr Qabazard.'

148. It is plain from that passage that the judge held that
Captain Stafford was liable after he left Kuwait because he had
not withdrawn from the conspiracy. It follows that his liability
in this regard depended crucially upon the finding that the
agreement or conspiracy was to defraud the claimants whenever
the opportunity arose. Thus, however long into the future a
particular defendant committed an act defrauding the
claimants, all the defendants were liable for the loss sustained
as a result because the act was committed pursuant to the
conspiracy. We have reached the conclusion that this part of the
judge's reasoning cannot be supported. In our judgment,

112
 neither the evidence of the agreement in September 1986 (or
indeed in December 1985) nor the inferences which could
properly be drawn from subsequent events justified the
conclusion that Captain Stafford agreed that he would continue
to take any part in the conspiracy after he had left Kuwait and
the employment of KOTC.

154. In these circumstances we have reached the conclusion

that none of the facts relied on by Mr Malins supports the
conclusion that Captain Stafford ever agreed to help in
defrauding the claimants after he left Kuwait. We do not think
that silence or subsequent cover-up rendered him liable as a
conspirator in the absence of evidence that he either played a
part in, or received the proceeds of, any later acts of
misappropriation on the part of Mr Al Bader or Mr Qabazard.
The conclusions reached by the judge in the passage quoted in
para 147 show that there was no such evidence.”

155. It follows that we need not concern ourselves further with a

general consideration of the doctrine of 'withdrawal' from a
common enterprise which has given rise to difficulty in the field
of criminal law and does not readily

[2000] 2 All ER (Comm) 271 at 328

transpose into the field of civil actions for conspiracy. It also

follows that Captain Stafford's appeal must be allowed in part
unless there is new evidence sufficient to support the judge's
conclusion that he should be liable in respect of losses sustained
by the claimants after he left Kuwait. Mr Malins submitted that
there is such evidence, to which we now turn”.

9. None of this poses any problem in respect of the Zambian based Defendants. I am quite
satisfied that they were all involved in the conspiracy from the start. I will expand on
this further when I analyse AGZ’s individual contentions against them.

10. The English based Defendants are facing a significant difficulty. It is plain that their
knowledge of a large amount of the misappropriations is non existent. There is no
evidence to show that they had any knowledge beyond the transactions that they were
involved in. If I find that they are conspirators in the over arching conspiracy they will
have a liability for all the losses. The differences can be significant. AS has a potential
dishonest assistance liability of $3,339,089. That figure reduces to $1,415,762 as a
result of the GT exercise of identifying traces from MOF. That itself further reduces in
the light of Miss Pincott’s further evidence to $1,347,993. In the case of CM the
dishonest assistance claim is $3,247,548 reduced to GT traces to $2,127,822 and further
reduced if limited to the correct proportion of MOF sources to $1,228,523. In the case
of MCD the corresponding figures are $9,216,000 and $7,021,020.17.

113
11. In contrast the final claim for damages for conspiracy is $25,754,316 subject to
reduction as set out above.

12. There are other further unfortunate consequences. It is not said that ND or BBT had any
active role in any alleged conspiracy or were dishonest in any way. Nevertheless if I
find respectively that IM and BT were parties to the conspiracy and those acts were done
as partners respectively in MCD and CM respectively they too are potentially liable for
the sum of $25,754,316.

13. Of course as I have indicated above there may be more than one conspiracy. It is
possible that when I evaluate the individual Defendants and I find they are guilty of
conspiracy the conspiracy is not the over arching conspiracy but the “sub conspiracies”
as Mr Croxford QC called them. If that is the case then I accept the Defendants’
submissions that the measure of damages on those conspiracies will be the same as any
liability that is established based on dishonest assistance.

14. The same principles do not apply to Irene Kabwe as no conspiracy claim is pursued
against her. Equally the claim against Basile is limited to the $1,029,400 and other
sums which were received.

15. It is clear that it is possible for a conspirator to join it at a later stage but he must be
aware of all the essential facts of the conspiracy and entertain the same object. As the
Kuwait case shows a person can become a party to the conspiracy tacitly. Thus I am
satisfied on the law for example that the participating Defendants can be found to be
conspirators if they were not aware of the initial conspiracy but tacitly became
conspirators. They can become conspirators when they are aware of all of the
surrounding circumstances and expressly or impliedly share the same object. This is
closely akin to the question of whether lawyers (and AS in my view) can be liable in
dishonest assistance because they become aware of things that they ought to question but
dishonestly fail to question them. I refer to the observations of Mance J in Grupo
Torras SA v Al-Sabah (No5) [1999] C.L.C 1469 at 1618:-

“In my judgment, no honest lawyer would have implemented

the instructions which Mr Folchi recounts in this transaction
unquestioningly and uncomprehendingly in the manner which
Mr Folchi did. There can be no question about Mr Folchi's
competence. An honest lawyer in his position would, to
safeguard himself and his clients, have insisted on obtaining a
proper understanding and assurances regarding the situation
(quite possibly in writing despite the supposed confidentiality of
what was occurring). If his clients would not give him this, he
would have refused to become involved. I do not on the material
before me conclude that Mr Folchi became knowingly party to
the scheme to injure GT or THL. But I do conclude that Mr
Folchi received and complied with instructions which
conflicted, on their face and in the most obvious way, with the
most fundamental of fiduciary duties, to keep private and
corporate affairs and monies separate. Despite any confidence
Mr Folchi may have had in his clients and the distinction of the

114
 officers whose accounts were in question and despite the
prevalence of complementary payments, I cannot view it as
honest conduct for any lawyer to facilitate indirect payments
from one's client company's accounts to unknown accounts in
the names of the client company's directors, without any clear
understanding why this should be necessary or appropriate. Any
other conclusion would be an invitation to fraud. Directors of
previously impeccable reputation can succumb to the
temptations of their stewardship. Any lawyer in Mr Folchi's
position must be taken to be aware of this risk, and I have no
doubt that Mr Folchi was as aware of it.”

16. Applying these principles as I have said therefore no doubts about FJT, XFC, SC, FK
and AC. (I do have doubts about Francis K however). On the basis of the evidence
before me as set out above it is plain that they all fully participated in the conspiracies
identified earlier in this judgment. It is impossible for them to argue given the fact that it
involved the removal of in excess of $25,000,000 of Government money that it was not
done with the intention to harm the Republic. No other conclusion is possible.

BREACH OF FIDUCIARY DUTY

17. I come to the same conclusion as regards the fiduciary Defendants i.e. FJT, XFC and
SC. The measure of damages in my judgment as regards XFC and SC are the sums
claimed in AGZ’s summary namely $25,754,316 plus $600,000 payments to CM from
OOP (XFC) and $25,754,316 (SC). At the moment the amount claimed against FJT is
$2,995,369 being the amount transferred from the Zamtrop account and other sources
attributable to FJT. That sum itself might be reduced to $1,098,962 or $1,031,247 being
the amounts traced by GT attributable to FJT and Basile. At the moment I see no
justification for such a low figure. I do not see why he should not be liable for his
breach of fiduciary duty to the same extent as XFC and SC. At the end of the day he
was the President and whatever the actions of XFC and SC and their respective breaches
none of it could have happened had FJT himself not committed his own major breach of
fiduciary duty. He participated in the secret setting up of the Zamtrop account for the
purposes of wrongfully removing the Republic’s Government funds. I will hear further
submissions on this by AGZ when I deliver judgment.

18. The other Defendants I will leave to their individual consideration below.

DISHONEST ASSISTANCE

19. In legal terms this has been the most analysed area before me. As is often the case I
doubt whether in practice it will make any difference. The dispute between the parties is
as to the nature of the test required to establish that a third party is liable for dishonest
assistance in a breach of fiduciary duty. I am quite satisfied that whatever the test FK
and the other Zambian Defendants (save Francis K) have plainly been dishonest so as to
be liable.

115
20. The difficulty is with the participating Defendants. The arguments essentially involve
an analysis of Royal Brunei Airlines v Tan [1995] 2 AC 378, Twinsectra Ltd v Yardley
[2002] 2 AC 164 and Barlow Clowes International Ltd v Eurotrust International Ltd
[2006] 1 WLR 1476. The first and third of those judgments are opinions of the Privy
Council and the Twinsectra case is a decision of the House of Lords. The essence of the
dispute is as to whether or not the test for dishonesty to make a third party liable for
dishonest assistance is an objective test or a subjective test. That is the way the
judgments have been analysed. They have spawned a huge amount of academic
literature. I suspect this analysis is largely a matter of over elaboration. In this context I
refer to two very useful articles. The first is by Lord Clarke MR “Claims Against
Professionals: Negligence, Dishonesty and Fraud” [2006] 22 Professional Negligence
70/85. The second is T Yeo “Dishonest Assistance: A Restatement from the Privy
Council” [2006] 122 LQR 171-4. In addition I should make reference to the statements
of Lord Walker of Gestingthorpe in the John Lehane Memorial Lecture (2004) where
he advocated a return to a “jury question”.

21. In my view when the cases are analysed the question of subjective/objective test is an
over elaboration. All of the cases when analysed in my view actually determine that the
test for dishonesty is essentially a question of fact whereby the state of mind of the
Defendant had to be judged in the light of his subjective knowledge but by reference to
an objective standard of honesty. It may be as I shall show that people were side tracked
by the Twinsectra case. I have sympathy with Mr Yeo’s observation in his article at
page 173:-

“In Barlow Clowes, Lord Hoffmann explained that the majority

in Twinsectra considered that a solicitor in those circumstances
who had failed to appreciate that the undertaking had given rise
to a trust had nevertheless complied with objective honesty
standards, while Lord Millett considered that the solicitor had
been objectively dishonest not withstanding the failure to realise
the legal implications of the transaction. If that is right, it was
unsporting of the majority to have let Lord Millett waste so
many pages arguing against a straw man“

22. Lord Clarke MR in his paper tracks the development of the law in this area. It started
with Lord Selbourne LC in Barnes v Addy [1874] LR 9 CH APP 244 at 251:-

“(A trustee’s responsibility) may no doubt be extended in equity

to others who are not properly trustees, if they are…actually
participating in any fraudulent conduct of the trustee to the
injury of the cestui que trust. But …. Strangers are not to be
made constructive trustees merely because they act as the agents
of trustees in transactions within their legal powers,
transactions, perhaps of which a court of equity may
disapprove, unless those agents receive and become chargeable
with some part of the trust property, or unless they assist with
knowledge in a dishonest and fraudulent design on the part of
the trustees.”

116
23. In Royal Brunei, the Privy Council fundamentally altered the test for dishonest
assistance. First it rejected the requirement that a breach of trust must arise as a result of
a dishonest and fraudulent scheme. Second it rejected the requirement that the third
party needed to be aware of the breach of trust. It replaced that requirement with a new
dishonesty test:-

“A liability in equity to make good resulting loss attaches to

person who dishonestly procures or assists in a breach of trust
or fiduciary obligation. It is not necessary that, in addition, the
trustee or fiduciary was acting dishonestly, although this will
usually be the case where the third party who is assisting him is
acting dishonestly” [1995] 2 AC 378, 392.

24. Thus that test as Lord Clarke MR said is simple and straightforward. The Court of
Appeal in its judgment in Grupo Torras said the test was not difficult to understand or
apply. It is essentially a jury point.

25. To understand what Lord Nicholls meant it is necessary to set out further parts of his
judgment. He said in the context of accessory liability dishonesty meant “acting
dishonesty or with lack of probity, which is synonymous, means simply not acting as
an honest person would in the circumstance” (ibid page 389).

26. He continued:-

“This is an objective standard. At first sight this may seem

surprising. Honesty has a connotation of subjectivity, as distinct
from the objectivity of negligence. Honesty, indeed, does have a
strong subjective element in that it is a description of a type of
conduct assessed in the light of what a person actually knew at
the time, as distinct from what a reasonable person would have
known or appreciated. Further, honesty and its counterpart
dishonesty are mostly concerned with advertent conduct, not
inadvertent conduct. Carelessness is not dishonesty. Thus for
the most part dishonesty is to be equated with conscious
impropriety.”

However, these subjective characteristics of honesty do not

mean that individuals are free to set their own standards of
honesty in particular circumstances. The standard of what
constitutes honest conduct is not subjective. Honesty is not an
optional scale, with higher or lower values according to the
moral standards of each individual. If a person knowingly
appropriates another's property, he will not escape a finding of
dishonesty simply because he sees nothing wrong in such
behaviour.

In most situations there is little difficulty in identifying how an

honest person would behave. Honest people do not intentionally
deceive others to their detriment. Honest people do not

117
 knowingly take others' property. Unless there is a very good and
compelling reason, an honest person does not participate in a
transaction if he knows it involves a misapplication of trust
assets to the detriment of the beneficiaries. Nor does an honest
person in such a case deliberately close his eyes and ears, or
deliberately not ask questions, lest he learn something he would
rather not know, and then proceed regardless. However, in the
situations now under consideration the position is not always so
straightforward. This can best be illustrated by considering one
particular area: the taking of risks.”

27. The test is clearly an objective test but the breach involves a subjective assessment of
the person in question in the light of what he knew at the time as distinct from what a
reasonable person would have known or appreciated. As the passage stresses
carelessness is not dishonesty and dishonesty is to be equated with conscious
impropriety. However self evidently a person is not allowed to set his own standard of
honesty in particular circumstances. I observe that if he were there would never be any
liability because the cases only come to trial if the person denies he is dishonest and did
not believe he was dishonest. All that is said in my view is another way of posing the
jury question. Merely because a person says he did not believe what he did was
dishonest does not mean the court has to accept that. If the court is of the opinion that
with his knowledge he consciously departed from the objective standards of propriety he
is dishonest. The text equally establishes that honest people do not deliberately close
eyes and ears or deliberately do not ask questions lest he learns something he would
rather not know and then proceed regardless.

28. Most cases present little difficulty in determining whether or not a person is dishonest.

29. This reasonably clear expression of the law survived for some 6 years. In Twinsectra a
difference appeared to have occurred.

30. The case concerned 2 solicitors. The first was acting in connection with a purchase of
land which required borrowings. The prospective lender was only willing to make the
loan if repayment was secured by a solicitor’s personal undertaking. The first solicitor
was unwilling to give such an undertaking so the client found a second solicitor who
gave an undertaking to apply the proceeds solely in the acquisition of the property. The
second solicitor sought assurances from the client that the money would be so used and
received them from the first solicitor. Thereupon he released the money to the first
solicitor who regarded the money as held upon account from the client and paid it out
upon his client’s instructions. He took no steps to ensure the money was only applied in
the acquisition of the property and a substantial part was used for other purposes. The
second solicitor went bankrupt and the lender commenced proceedings against the first
solicitor alleging that he dishonestly assisted in the second solicitor’s breach of trust.
The Judge at first instance found that the first solicitor had not been dishonest although
he had deliberately shut his eyes to the implications to the undertaking. The Court of
Appeal reversed that finding giving judgment against the first solicitor for the proportion
of the loan that had been misapplied. On appeal the House of Lords (Lord Millett

118
 dissenting) in effect in my view refused to go behind the first instance Judge’s finding
that the solicitor was not dishonest and therefore reinstated his dismissal of the claim.
The difficulty of the decision was the first instance Judge’s finding that whilst the
solicitor had deliberately shut his eyes he was not dishonest see Lord Slynn’s judgment
paragraphs 4-5. The leading judgment was that of Lord Hutton. He expressed the view
that Lord Millett’s dissenting judgment involved a purely objective test (paragraph 30)
and thus expressed the view that Lord Millett’s test on determining the liability of an
accessory dishonesty was not necessary and that liability depended on knowledge.

31. Like Lord Clarke MR with respect I do not see that as the test that Lord Nicholls applied
in Tan. Nor do I see with respect Lord Millett’s judgment saying that either (see
paragraphs 112 and 113). In particular where he stated that “dishonesty …. was a
necessary and sufficient ingredient of accessory liability. Knowingly was better
avoided as a defining ingredient of the principle (echoing Lord Nicholls in Tan)”. In
other words Lord Millett said precisely the opposite to the words attributed to him by
Lord Hutton. He reinforced this in paragraph 121:-

“In my opinion Lord Nicholls was adopting an objective

standard of dishonesty by which the Defendant is expected to
obtain the standard which would be observed by an honest
person placed in similar circumstances. Account must be taken
of subjective considerations such as the Defendant’s experience
and intelligence and his actual state of knowledge at the
relevant time. But it is not necessary that he should actually
have appreciated that he was acting dishonestly; it is sufficient
that he was”.

That seems to me to be right because otherwise one allows a party to set his own
test for dishonesty.

32. In paragraph 32 of his judgment Lord Hutton expressed the view that Lord Nicholls was
saying that a Defendant to be liable must know that what he was doing “would offend
the normally acceptable standards of honest conduct, and the need to look at the
experience and intelligence of the Defendant would also appear superfluous if all that
was required was a purely objective standard of dishonesty”.

33. I agree with Lord Clarke MR’s analysis (ibid page 77) that read fully Lord Nicholls in
Tan starts with what an honest person should know as he conducts his affairs. Then
when it comes to testing an individual’s honesty there is no question of what the
individual himself thought about his conduct; the court is to assess honesty by taking
account of the individual’s experience, his knowledge and his reasons for so acting.

34. In my view the difficulty in the Twinsectra case arose from the language in the
judgment at first instance. This arises because of a common judicial reluctance to make
grave findings in particular against professional men. In my view this reluctance is
erroneous. First there is no justification in applying a more strict principle against a
Defendant merely because he is a professional. It is no less grave for a non professional
to be accused of dishonesty. The courts have always been reluctant wrongly in my view
to adopt that stance. Second cases in the last decade have shown sadly that there are

119
 plenty of professional men who act dishonestly.

35. Lord Hoffmann agreed with Lord Hutton that Lord Nicholls’ test in Tan required a
dishonest state of mind. In other words a Defendant would have had to have been
conscious of the fact that he was “transgressing ordinary standards of honest
behaviour”. He rejected Lord Millett’s judgment on the ground that it departed from the
principle laid down in Tan (paragraphs 19-20). Once again like Lord Clarke MR I do
not think this is with respect an accurate analysis of Lord Millett’s judgment.

36. The Twinsectra decision attracted a blizzard of academic discussion.

37. The Twinsectra decision was considered by the Privy Council in Barlow Clowes.

38. These decisions present a nightmare for a first instance Judge. The Tan decision was a
Privy Council decision and thus of persuasive authority. Lord Steyn and Lord
Hoffmann sat in Twinsectra and agreed with the leading judgment of Lord Hutton. Lord
Nicholls, Lord Steyn and Lord Hoffmann sat in Barlow Clowes. Both Tan and Barlow
Clowes followed the traditional Privy Council practice of delivering one opinion to Her
Majesty as to the decision. Lord Walker also sat in Barlow Clowes (he had referred to
the need to return to the “jury point” above).

39. Lord Hoffmann delivered the opinion which was an appeal from the decision of the Staff
of Government Division of the Isle of Man. In paragraph 11 of the opinion he set out
the Judge’s first instance finding that there were strong suspicions of the funds passing
through the Appellant’s hands were monies which Barlow Clowes had received from
members of the public who believed that they were subscribing to a scheme of
investments in guilt edged securities. The Board expressed the opinion “if those
suspicions were correct no honest person could have assisted Mr Clowes and Mr
Cramer to dispose of the funds for their personal use”.

40. In the context of the case before me that is likely to be an important observation in my
view.

41. In paragraph 12 the Board went on to consider that by ordinary standards such a state of
mind would be dishonest. However it pointed out that the Judge found that Mr
Henwood may well have lived by different standards and seen nothing wrong in what he
was doing. It was submitted on behalf of Mr Henwood that because Mr Henwood had
had his own state of mind he could not be dishonest because he was not consciously
dishonest and the Judge made no finding about Mr Henwood’s opinions about normal
standards of honesty. The only finding was that by normal standards he had been
dishonest but that his own standard was different.

42. In paragraph 15 of the opinion Lord Hoffmann accepted that there was an element of
ambiguity in the remarks which might have encouraged a belief in some academic
writings that Twinsectra had departed from the law as previously understood and invited
an enquiry not merely in the Defendant’s state of mind about the nature of the
transaction in which he was participating but also in to his views about generally
acceptable conduct of honesty. He expressed the view that that was not what Lord
Hutton meant and that the reference in Lord Hutton’s judgment to “what he knows

120
 would offend normally accepted standards of honest conduct” meant only that his
knowledge of the transaction had to be such as to render his participation contrary to the
normally acceptable standards of honest conduct. It did not require that he should have
had reflections about what those normally acceptable standards were (paragraph 15). In
paragraph 16 the opinion stated that Lord Hoffmann in Twinsectra (paragraph 20) meant
that “consciousness that one is transgressing ordinary standards of honest behaviour”
was intended to require consciousness of those elements of the transaction which made
participation transgress ordinary standards of honest behaviour. He emphasised that it
did not also require him to have thought about what those standards were.

43. Finally in paragraph 18 he rejected Lord Neil’s submission that the Judge failed to apply
the principles of liability for dishonest assistance which had been laid down in the
Twinsectra case. He expressed the opinion that there was no difference between the
principle stated in Tan and Twinsectra. The Privy Council therefore reversed the
decision of the Staff of Government Division and reinstated the decision of the Judge in
the first instance.

44. What conclusion can be drawn from the two decisions? I can do no better than
gratefully adopt the observations of Lord Clarke MR:-

“… the simple fact of it seems to be that those who thought that

the majority in Twinsectra interpreted the test for dishonesty as
a combined test, had misunderstood the majority’s decision. It
might equally be said that the majority and minority in
Twinsectra had also misunderstood what each other meant:-
Lord Hutton and Lord Hoffmann misunderstood what Lord
Millett held and vice versa. Everyone agreed that the test was
an objective one i.e. the test did not require any inquiry into the
Defendant’s subjective assessment of standards of honesty”.

I agree with his conclusions “the test is an objective one, but an objective one which
takes account of the individuals in questions characteristics”. I agree (as he really said)
it is not appropriate to draw analogies with other areas. He went on to say “it is a
test which requires a court to assess an individual’s conduct according to an objective
standard of dishonesty. In doing so, the court has to take account as to what the
individual knew; his experience, intelligence and reasons for acting as he did.
Whether the individual was aware that his conduct fell below the objective standard
is not part of the test”.

45. I also agree that the area has been bedevilled by an inappropriate use of nomenclature.
Legal tests which were explained by reference to terms of objective and subjective are
open to multiple interpretations. They fail to elucidate, muddy the waters and provide a
feast for academic opinion. In my view this is correct and in reality the Tan test was
nothing more than a jury question “was the Defendant dishonest”. Finally I would
observe that Lord Clarke MR expressed the view (without hearing argument on the
point) that the unanimous decision of the Privy Council which included Lord Nicholls,
Lord Hoffmann and Lord Steyn is likely to be followed by the English courts.

46. The Court of Appeal had to grapple with the interesting point in Adnan Shaaban Abou-

121
 Rahmah and ors v Abacha [2006] EWCA Civ 1492 the Judge at first instance had
expressed the law in this area as follows:-

“i) A dishonest state of mind on the part of the person assisting

is required in the sense that that person’s knowledge of the
relevant transaction had to be such as to render his
participation contrary to normally acceptable standards of
honest conduct.

ii) Such a state of mind may involve knowledge that the

transaction is one in which he cannot honestly participate (eg a
misappropriation of other people’s money), or it may involve
suspicions combined with a conscious decision not to make
enquiries which might result in knowledge.

iii) It is not necessary for the Claimants to show that the person
assisting knew of the existence of a trust or fiduciary
relationship between the Claimants and the First to Third
Defendants and/or the Claimants’ monies to Trusty
International via the [Bank] involved a breach of that trust or
fiduciary relationship.”

47. That had been accepted as an accurate statement of the present authorities by Counsel
for the Appellant. Rix LJ in paragraph 16 said that 3 things needed to be shown:-

“ First, that a Defendant had the requisite knowledge;

secondly, that, given that knowledge, the Defendant acts in a
way which is contrary to normally acceptable standards of
honest conduct (the objective test of honesty or dishonesty); and
thirdly, possibly, that the Defendant must in some sense be
dishonest himself (a subjective test of dishonesty) which might,
on analysis, add little or nothing to knowledge of the facts
which, objectively, would make his conduct dishonest.”

48. Although there were indications that the Judge below appeared to consider questions of
knowledge only he concluded that the Judge had acquitted the relevant Defendant of any
dishonesty (paragraph 40) and that it would not be right to reverse the Judge’s appeal so
as to conclude that the bank was dishonest in the Twinsectra sense.

49. Arden LJ considered the dishonesty issue. She expressed her summary (paragraph 59)
that “this is the first opportunity, so far as I am aware, that this Court had the
opportunity of considering the decision of the Privy Council, and in my judgment this
court should follow the decision of the Privy Council…”

50. She analysed subsequently the Tan and Twinsectra decisions and pointed out that the
Barlow Clowes decision was a persuasive authority only whereas Twinsectra was
binding (paragraph 66). However her conclusion was that the Judge and the Court of
Appeal were justified in following the analysis in Barlow Clowes for the reasons set out

122
 in paragraph 68 of her judgment. She accordingly applied the dishonesty test as
interpreted in (Paragraph 69).

51. Pill LJ gave the third judgment. He agreed with Rix LJ that it was not necessary in the
appeal to resolve the question of the impact of Barlow Clowes as the case before them
did not turn upon it. He agreed with Rix LJ’s and Arden LJ’s analysis of there being a
possibly subjective element but expressed the view that this was best considered in a
case in which a real issue arose on its impact. As he rightly pointed out in paragraph 93
Barlow Clowes did not find the House of Lords decision in Twinsectra as wrong. As I
said earlier the Twinsectra result was based on a finding by the Judge at first instance
being restored but that the Defendant was not dishonest.

52. It follows that on the analysis of the judgment in the Court of Appeal their observations
on the Twinsectra/Barlow Clowes controversy appear to be strictly obiter.

53. In my view as set out earlier in this judgment I think the test propounded by Lord Clarke
MR is the better one. I do not think anything is gained by using potentially difficult
words such as objective or subjective. I do not believe that there was anything other
than a misunderstanding as between the effect of the various judgments in Twinsectra
which spawned a huge unnecessary debate. This is what Barlow Clowes was intended
to confirm and in my view it plainly did. In this context I remind myself of the
observations of Megarry J in Cordell v Second Clanfield Properties [1969] 2 Ch 9 at
page 16 of the difference between academic writings and legal arguments in court.

54. Finally in the case of Barnes v Tomlinson [2006] EWHC 3115 Kitchin J at paragraph
78 in the case before him stated that the parties agreed that the dishonesty test was:-

“(1) It is for the court to determine what are the normally

acceptable standards of honest conduct.

(2) The fact that a Defendant genuinely believes that he has

not fallen below the normally acceptable standards of honest conduct
is irrelevant”

That decision did not have the benefit of the Court of Appeal’s observations in Abacha.
I note that Abacha was delivered on the first day of the hearing of the case before
Kitchin J.

55. I agree with that analysis which in my view is the same as the analysis propounded by
Lord Clarke MR and that propounded by the Judge at first instance in the Abacha case.
Essentially it is a jury question as to dishonesty to be assessed in the light of all the
material as summarised above.

56. That is the test that I will apply in deciding whether or not the assisters in this case are
liable for dishonest assistance.

57. In that context the observations of Mance J in Grupo Torras referred to earlier in this
judgment are relevant.

58. In addition the cases establish (adopting the observations of Lord Scott in Manifest

123
 Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 116 that “a
suspicion that the relevant facts do exist and a deliberate decision to avoid confirming
that they exist” is sufficient blind eye knowledge such as to make a Defendant’s conduct
dishonest. The dividing line between conduct which would be dishonest and
incompetence is a difficult one to draw. It is necessary to establish on the facts on which
side the conduct was. I say that because in this case both IM and BT acknowledge that
they have been extremely negligent in the way in which they conducted matters.

FURTHER EVIDENCE OF DISHONESTY

1. I have referred to the various Press articles that came out in the Zambian Press. The
most significant one from IM’s point of view is the Post of 25th June 2002 with the
analysis of “Chiluba’s matrix of plunder”. This cannot be dismissed as a piece of
sensationalist journalism. As I have said earlier it for the most part accurately set out
what had gone on. MCD and IM are named and references made to the fact that
$9,000,000 has been paid to MCD (which is correct).

2. MCD had received a letter on 9th May 2002 from the SFO in respect of documents
relating to an investigation about Systems.

3. IM said he became aware of the Press reports that AFSL was being investigated
regarding allegations of corruption. In his witness statement (paragraph 117) he said he
ceased acting for AFSL pending clarification. Such a statement barely addresses the
issues which an honest solicitor must have concerned himself about in the light of the
newspaper articles. He would have been bound to question the inter relationship that he
perceived between ZSIS and AFSL. He would be bound to question the validity of the
payments which had been run through his client account in the previous 6 years. He
would want to know answers from FK and XFC.

4. Finally if he was an honest solicitor I would have expected him bearing in mind the fact
that his firm was named in the Article to have contacted the authorities first to protest
his innocence and second to assist in any investigation. In fact he did none of these.

5. Equally when he said in his witness statement he ceased acting for AFSL in June 2002
he is being extremely economical with the truth. The day after the newspaper report he
paid out $12,545.74 to IK. That came out of the AFSL account 3556 which was
supposed to have taken over from the earlier account (2535). That left a balance of
$7,161.45 on that account. On 31st May 2002 MCD transferred $10,000 to CM. At
June 2002 the balance on account 2535 was $9,815.95. On 1st November 2002 MCD
paid $7,541.03 to Robert Simeza (FK’s lawyer). At June 2002 the Harptree ledger was
in credit in the sum of $871,311.99. On 12th November 2002 MCD transferred a further
$75,058.03 to CM on the written instructions of FK dated 15th October 2002. That
account remained dormant until I made an order on the opening of the trial to transfer
the funds to the credit of AGZ.

6. An honest solicitor in my view would have told the authorities of the existence of these
funds in the Harptree account. One has to look at the situation in June 2002. FK is
accused of fraud. IM asserts that FK/AFSL were his clients but in respect of Harptree
FK though not the client gave the instructions. IM knew that the money that came into

124
 the Harptree account came from the Zamtrop account and was Government money. Yet
he did not report the matter to NCIS for another 2 years and he never reported the matter
to the authorities in Zambia. Those are not the actions of an honest man in my view.
Further in my view his statement that he ceased to act for AFSL is a lie designed to give
an impression of honesty when he was still making dishonest payments. The very
minimum an honest solicitor would have done in those circumstances in my view is to
say to FK and the others that he could do nothing and would release no monies until the
position was made absolutely clear.

7. Simultaneously MCD was investigated by the OSS in July 2002. Yet still IM disbursed
money thereafter on FK’s instructions.

8. CM sent MCD the instructions with FK’s signature on to transfer the funds to Mr
Simeza. The instructions in respect of the $75,000 transferred to CM are even more
intriguing. The first one was a fax from FK on AFSL notepaper to IM dated 15th
October 2002. In this FK requested “on behalf of your client Harptree please arrange
to pay the sum of $75,000 to [CM] in connections of expenses incurred on behalf of
this client”

9. Despite the furore created by the Press releases IM never asked what services were being
provided to Harptree. It never apparently occurred to him to think that he should not
accept instructions from FK to transfer monies held in the name of Harptree which he
knew were Government monies derived from the Zamtrop account. There was
obviously some prevarication which IM has not explained because he received a further
letter from FK dated 6th November 2002 where it says “I have been asked by Access
Financial Services Ltd to request you to remit the sum of $75,000 to Cave Malik & Co
London on behalf of client Harptree”. This was sent to him by fax on 8th November
2002 by BT. There is an attendance note written on it by IM as follows:-

“have advised [CM] that Harptree is our client and not Access
and we will act on the instructions of FK who is authorised on
behalf of Harptree and will act in accordance with his
instructions dated 15th October 2002”.

10. He had received a letter dated 1st November 2002 from AFSL written by AC. This letter
purported to give IM authorisation to continue dealing with FK in relation to any
business between the two organisations. FK was stated to have full authority to
represent the company in this regard.

11. IM dealt with this in paragraph 121 of his witness statement. He had received the letters
set out above but notwithstanding this was not happy to take instructions on behalf of
AFSL. He states that he did not believe at that point that he could not act for Harptree
and that he was prepared to do so acting on FK’s instructions on behalf of Harptree not
AFSL. He said “It seemed to me at the time that this was entirely permissible. [FK]
remained the person who was authorised to give instructions on behalf of Harptree
irrespective of his other difficulties”.

12. In my view this is dishonest window dressing to provide a spurious justification for
continuing to deal with FK. It is impossible in my view to compartmentalise Harptree

125
 from the troubles that were apparently affecting AFSL, FK and AC who were all
identified in the Matrix of Plunder article. Simply accepting without further ado AC’s
statement that FK continued to have authority is something that an honest solicitor in my
view would not do. They are all alleged to be involved in the conspiracy and being told
by the conspirators to carry on in the same old way is simply not acceptable. Equally
given the sourcing of the funds in Harptree and the fact that it was Government money
and the fact that whilst FK might have had instructions those instructions were on behalf
of the Government it is impossible for an honest solicitor to allow FK to direct $75,000
out of the Harptree account to CM without finding out fully what is going on. IM
followed the same practice that he had done throughout the whole of the relationship; he
made no enquiries.

13. Unsurprisingly he was cross examined on all this (T33/124 et seq).

14. At sometime during this period there were discussions between IM and BT. There is a
dispute between them as to how these discussions took place. There is an undated
attendance note of BT’s “attended offices of IM to discuss options on various
occasions too numerous to mention”. He was unable to explain how he could use
money that belonged either to AFSL or ZSIS to pay Mr Simeza.

15. In respect of the payment of $75,000 he said it did not occur to him to get in contact
either with the Republic or ZSIS but maintained he thought it was permissible for him to
act on FK’s instructions despite the fact that by then FK had already been arrested. As
had XFC the two people of course who had introduced him to the arrangements under
the Churchill Hotel Agreement. The answers are completely unconvincing. This too is
a pattern of dishonest conduct on the part of IM.

DR CHILUBA (FJT) (D3)

3. FJT was the President of Zambia between 1991 and 2002. As I have set out above his
earnings then and before were extremely modest in terms of the sums involved in this
action. His current assets are equally modest and there is nothing to show from his
background that he was in a position to accumulate large wealth.

4. It is somewhat ironic that he was initially elected on an anti corruption ticket against the
first President of the Republic Dr Kenneth Kaunda. This case shows how he too rapidly
succumbed to the lure of having access to large sums of money which he was unable to
keep his hands off. The difficulties of discovery and challenge are shown as I have set
out above with what happened to Mr Dipak Patel in March 2002.

5. The claims against FJT are $2,995,369 maximum currently for breach of fiduciary duty.
I have already observed that in my view that is not the appropriate figure and I invite
AGZ when I deliver this judgment to seek the same figure as is claimed against XFC and
SC. I do not see how FJT can have any lesser liability for breach of fiduciary duty than
them. Indeed there are compelling reasons why he should have the same liability. At
the end of the day he was the President at the top of the control of Government finances.
He was uniquely positioned to prevent any corruption. Instead of preventing corruption

126
 he actively participated in it and ensured it happened. It is difficult to find an adjective
that adequately describes the failure on the part of FJT. He has defrauded the Republic.
He has deprived the people over whom he was exercising stewardship on their behalf of
huge sums of money which was supposed to be spent for their benefit. He has diverted
those monies for wide ranging benefits of the co conspirators but has not (unlike Clive
of India) shown restraint himself in the amount of money which he “plundered” from
the Government coffers. It is a shameful series of actions and he should be ashamed.

6. FJT initially participated in the proceedings and served a Defence. He made statements
to the press before the proceedings were commenced (see above). On 31st May 2005 he
swore an affidavit of means which disclosed limited assets. His Defence was an
inadequate document. He only participated in the proceedings as long as it suited him to
try and stop them. Once that ruse failed he “discontinued participation”. He has
therefore made a deliberate decision not to serve a witness statement or give oral
evidence despite the fact that every reasonable and fair step was taken to ensure that all
of his fears were allayed. He gave no genuine reason for not giving evidence.

7. When the trial started in London he issued a statement which broke the terms of the ring
fencing order designed to protect him. He was provided with transcripts until the
provision of transcripts was abused by one of the Zambian based Defendants by leaking
it selectively to the Press.

8. As the former President in the light of the serious allegations made against him he ought
to have in conscience explained himself to the Zambian people. He was in a position so
to do in these proceedings without any fear of compromising any Defence in criminal
proceedings and without any fear that the evidence he gave could be misused by AGZ.
He has not taken advantage of that option and in so doing he has in my view further
abused the people of Zambia. They are entitled to an explanation from him as to what
has happened to the large amounts of monies which were under his control by virtue of
the Finance Charter and which came into and out of the Zamtrop account. He had all the
documents provided and therefore lacked in nothing to present his case.

9. It is plain that he owed fiduciary duties to the Republic as alleged by AGZ. Dr Matibini
confirms this.

10. I have already dealt with his inadequate Defence in respect of the conspiracy. I am quite
satisfied that he had an active role in the setting up of the Zamtrop account and its
operation. I am also satisfied that on occasions he actively participated in payments
made to it and he received substantial personal benefits. The first personal benefit
occurred as early as 29th December 1995 when $20,000 was transferred to Basile. That
payment was authorised by XFC. Significant sums were spent on benefits for his
children in terms of cash, business class air tickets, expensive school fees or similar. He
did not have the resources to fund this. The only slender possible justification put
forward is that the Zamtrop account was fed by beneficial donors and this money was
used. I reject that as being incredible. I cannot conceive as I have said earlier that an
innocent person would mix donation monies with Government monies in a Government
account if it was a genuine Government account. Second no evidence has been adduced
to show any such donations. Third even if there were donations there is a procedure for
declaring the donations; they are not supposed to be hidden away in a secret account

127
 which is monitored by FJT, XFC and the Auditor General. In other words FJT is simply
lying.

11. The “Picture payments” (so called with some hilarity by the Zamtrop officials who
administered it by reference to a picture of FJT on the wall) whilst not clearly identified
as having come from MOF and into the Zamtrop account (as shown by IM in his
closing) nevertheless are sums which FJT ought to have declared and accounted for if
they came from third parties. This is the sole potential instance of third party monies.
They are however not available for his private use unless they are fully declared and
accounted for. FJT well knew about the payments. On at least one occasion he
discussed them with Beauty Kaluba the ZANACO Branch Manager in London (her
statement to the TF 24/71). Absent any explanation for these payments (and there is
none) I conclude any third party payments were made dishonestly to repay or secure
favours from FJT.

12. FJT in his interview statements with the TF and his Defence suggested any questions to
the operation of the Zamtrop account should be addressed to XFC the controller of that
account. This is disingenuous. First it ignores FJT’s overall control of the Zamtrop
account via the Finance Charter and his right to have that account audited. Second it
ignores the fact that he received significant benefits from the Zamtrop account without
any justification for such entitlement.

13. The best example is again the Basile clothes. FJT has created for himself a wardrobe of
stupendous proportions. He knows he has not paid anything towards it. He knows
therefore that somebody must have paid for it and he knows in fact that XFC has
arranged the payments through the Zamtrop account. He knows therefore that
Government monies have been used to provide his own personal wardrobe. Much of it
has been seized but it is plain that he is still benefiting from the wardrobe when he goes
out in public in Zambia or when he goes abroad for treatment as the Press photographs
show.

14. If he had carried out his duties of checking the audit and operation of the Zamtrop
account he would have known he had received substantial benefits from it. He ought
then to have questioned that and in effect refunded the Government. He either made no
enquiries because he knew full well the money was being dishonestly misappropriated
(inter alia) for his own benefit. Alternatively he made no enquiries because he knew
dishonest activity was being carried out on that account and he did not wish to make any
such enquiries. The latter is the less likely scenario because he himself received
substantial benefits. Nevertheless it makes him responsible for the full losses caused by
the conspiracy and the breach of fiduciary duty.

15. FJT raised a number of specific points in paragraphs 13 and 15 of his Defence. I will
deal with them in turn by reference to the letter reference in FJT’s Defence.

(R) CONCLUSION

1089. In conclusion my determination against each Defendant is as follows:-

128
ZAMTROP CONSPIRACY LIABILITY

XFC

1090. His liability is the headline figure of $25,754,316 plus $600,000 damages for conspiracy.
The breach of fiduciary figure is the same less $600,000. Credit will have to be given for
the realisations and disallowances set out earlier in the judgment (paragraph 440).

FJT

1121. His liability is the same as that of XFC (paragraph 470).

SC

1122. Her liability is the same as that of XFC (paragraph 485).

FK

1123. He has the same liability as XFC for conspiracy and the liability in dishonest assistance
is for the sums transferred to MCD ($7,021,020.17) and CM ($2,127,822) (paragraph
501).

AC

1124. His liability is the same as that of FK (paragraph 503).

Francis K

1125. His liability is for $62,279 for knowing receipt only.

IK

1126. Her liability on the claim as pleaded is dismissed. On the basis that I permit AGZ to
amend his claim at this very late stage her liability will be $387,557 (paragraph 527).

BASILE

1127. His liability is for $1,209,400 for dishonest assistance and conspiracy. As I have said he
receives no credit for the “value” of the President and XFC’s clothes (paragraph 539).

IM/MCD/ND

1128. The liability is for $7,021,020.17 for conspiracy and dishonest assistance (paragraph
543) plus an additional sum calculated in accordance with paragraph 275 above.

BT/CM/BBT

1129. The liability is for $2,127,822 plus a further sum calculated in accordance with
paragraph 275, $599,990 (OOP payments) plus £155,000 for Redcliffe for conspiracy

129
 and dishonest assistance (paragraph 874).

AS

1130. His liability is for $2,938,701.58 (the traced items set out in paragraph 1026) and
£96,938 (dishonest assistance). In addition there will be a further sum under paragraph
275. I leave open the question of conspiracy given my observations on the pleadings
above.

MOFED

1131. For the reasons given earlier there is no liability (paragraph 1053).

BK CONSPIRACY

1132. Mr Soriano is liable for the full amount $20,200,719 (paragraph 1058) and $1,000,000
personally received by him (paragraph 1091).FJT (paragraph 1100), XFC (paragraph
1098), SC (paragraph 1102), FK (paragraph 1106) are also liable for the same sums.
Credit is to be given for the Harptree receipt.

1133. IM, MCD and ND are liable for the sums actually received ($1,299,456.70) (paragraph
1107) less the Harptree receipt.

1134. BT, CM and BBT are liable for $452,043.03(paragraph 1114).

1135. There can only be one Harptree credit for all conspirators. It seems to me that the credit
ought to be given against the three categories of Defendants pro rata i.e. those liable for
$21,200,719, IM/MCD/ND and BT/CM/BT. If the parties agree I will leave them to
work the figure out. If they disagree I will hear submissions on it.

1136. There will be presumably claims for interest and arguments about costs. In addition I
assume there will be applications for some form of injunctive relief and questions in
respect of the security given by AGZ. The ring fencing provisions will also need to be
addressed.

130
0