FG Hemisphere Associates

JurisdictionJersey
CourtRoyal Court
JudgeH. W. B. Page,Jurats Tibbo,Kerley
Judgment Date27 October 2010
Neutral Citation[2010] JRC 195
Date27 October 2010

[2010] JRC 195

ROYAL COURT

(Samedi Division)

Before:

H. W. B. Page, Q.C., Commissioner, and Jurats Tibbo and Kerley.

Between
FG Hemisphere Associates LLC
Representor
and
(1) The Democratic Republic of Congo
(2) La Generale des Carrieres et des Mines
Respondents

and

Groupement pour le Traitemant du Terril de Lubumbashi Limited
Party Cited

Advocate K. J. Lawrence for the Representor.

Advocate J. Harvey-Hills for the Second Respondent.

Advocate A. D. Robinson for the Party Cited.

The First Respondent did not appear and was not represented.

Authorities

Trendtex Trading Corp v Central Bank of Nigeria [1977] 1 QB 529, CA at 559, 560.

Kensington International Limited v Republic of Congo [2005] EWHC 2684 (Comm).

Walker International Holdings v Congo [2005] EWHC 2813 (Comm.). la Loi No. 78-002 du 8 janvier 1978 portant dispositions généralés applicables aux enterprises publiques.

Compensation (Defence) Act 1939.

Pothier, in his Traités de la Procédure Civile et Criminelle.

Société Eram Ltd v Cie Internationale [2004] 1 AC 260 HL.

Dicey, Morris and Collins on The Conflict of Laws, 14 th Ed. (2006), Vol.2 at p.1116.

New York Life Insurance Company v Public Trustee [1924] CA 2 Ch 101.

Kwok v Estate Duty Commissioner [1988] Privy Council 1 WLR 1035.

In re Russo-Asiatic Bank [1934] Ch. 720, 738.

F & K Jabbour v Custodian of Israeli Absentee Property [1954] 1 WLR 139, 146.

Cambridge Credit Corporation v Lissenden (1978) NSWLR, 411.

In re Helbert Wegg & Co [1956] Ch 323.

Richardson v Richardson [1927] P228.

Deutsche Shcachtbau-und Tiefbohrgesellschaft mbH v Shell International Petroleum Co Ltd [1990] 1 AC 295.

In re Kaplan [2009] JLR 88.

Proceeds of Crime (Jersey) Law 1999.

King v Serious Fraud Office [2009] 1 WLR, 718, [2009] UKHL 17.

Bankruptcy (Désastre) Jersey Law 1990.

In re Rosedale Investments [1995] JLR 123.

This judgment was supplied to the parties in draft in accordance with Practice Direction RC 10/01 on 10 th September, 2010. The Royal Court subsequently declined to accede to an application by the Representor, Second Respondent and Party Cited to suspend formal handing down pending the outcome of settlement discussions then in progress but, on the application of the Second Respondents and the Party Cited granted leave to appeal that ruling. On 27 th October, 2010, settlement discussions having failed, the Second Respondents and Party Cited gave notice of withdrawal of their appeals. Judgment is, accordingly, handed down as of 27 th October, 2010.

THE COMMISSIONER:
CONTENTS

I Introduction

II. Law on the Personality Issue

III. The form of the trial and the nature of the evidence

IV. The Democratic Republic of Congo

V. Reform of Public Enterprises:-

A Mining Sector:-

B Gécamines

VI. The point in time at which the status of Gécamines has to be determined

VII. Gécamines' Constitution:-

A Reforms:-

B Immunity from Execution

VII. Relations between Gécamines and the State:-

A. In time of war

B. The Mining Commission

C. The Sicomines project:- China, the DRC and Gécamines

D. Public/Social Services

IX. Discussions and Conclusion:- the Personality Issue

X. Arrêt entre mains:- nature and effect

XI. GTL's Case:-

A Situs:-

B Registered Office in Jersey:-

C Residence in DRC:-

D Double Jeopardy:-

E Inutility and abuse of process:-

F Conclusion

XII. Summary of Conclusions

I INTRODUCTION
1

The issues with which this judgment is concerned arise in proceedings launched by the Representor (“Hemisphere”) on 12 th March, 2009, against the First Respondent (“the DRC”), the Second Respondent (“Gécamines”) and the Party Cited (“GTL”). Although the trial of those issues is technically the inter partes hearing in respect of certain orders granted by this Court ex parte on 19 th March last year (Clyde-Smith, Commissioner, and Jurats Le Breton and Newcombe), in practice it represents by agreement of the parties the definitive determination of the substantive issues raised by Hemisphere's Representation.

2

Hemisphere is the assignee of the benefit of two ICC arbitration awards made against the DRC and a Congolese company called Société National D'Electricité in April 2003 (“the Awards”). The identity of the original claimants in the arbitrations and the circumstances of the disputes that resulted in the Awards are of no relevance to the present trial. The validity of the assignment in November 2004 is not in issue. Since then Hemisphere's efforts world-wide to recover on the Awards have, it is said, met with little success, with the result that there is now in excess of US$ 100,000,000 still outstanding, together with daily-accruing interest.

3

Gécamines is a substantial mining company incorporated in the DRC, the largest of several. Hemisphere contends that it is, on a true analysis, an organ of the state of the DRC. The contention is vigorously denied by Gécamines.

4

GTL is a Jersey-incorporated company with its registered office in St. Helier in which Gécamines owns shares and with which Gécamines has a long-running contractual relationship which generates considerable income for Gécamines.

5

Hemisphere's purpose in starting proceedings in this court is to endeavour to recover at least a large part of the amount still unpaid by the defendants to its original claims by obtaining leave to enforce the Awards (as New York Convention awards) as a judgment of this Court against the DRC and Gécamines and to execute that judgment against certain assets of Gécamines (and thus assets of the DRC) which, Hemisphere contends, are situate in Jersey and amenable to execution.

6

The assets in question are said to be 23,600 shares in GTL of which Gécamines is the registered owner (“the Shares”), and the right of Gécamines to receive certain payments due to Gécamines by GTL in respect of the supply of cobalt and copper-bearing slag under a contract known as “the Slag Sales Agreement” (“the Slag Sales Payments”). Hemisphere believes that payments accruing due under this agreement are likely to be of the order of US$30–45 million per annum for the next eight years or so.

7

The principal issues of substance are whether the relationship between Gécamines and the DRC is such that the former should properly be regarded as an organ of state, and if so whether execution against the Shares and Slag Sales Payments is permissible. The first of these is essentially an issue between Hemisphere and Gécamines; the second an issue which is also contested by GTL. The DRC itself has played no part in the proceedings.

8

The original order made by this Court, ex parte, on 19 th March last year:-

The Court also granted Hemisphere interim conservatory relief against GTL, the DRC and Gécamines designed to freeze the target assets together with extensive disclosure orders.

  • (i) granted interim conservatory relief in the form of an immediate arrêt entre mains of the Shares and the Slag Sales Payments held or under the control of GTL;

  • (ii) granted leave to Hemisphere to enforce the Awards in the same manner as a judgment against the DRC and Gécamines in Jersey subject to either of these parties having leave to apply to set aside or vary that part of the order within a period of two months and fourteen days from service on them of the order (“the Relevant Period”); and

  • (iii) granted leave to Hemisphere to effect execution of the Awards by way of distraint upon the Shares and the Slag Sales Payments by means of arrêt entre mains confirmée and otherwise in the manner stated in the order, subject again to the two Respondents – and in this case also GTL as Party Cited – being at liberty to apply to set aside or vary this part of the order and provided that no such execution should take place before expiry of the Relevant Period and that in the event of any such application this part of the order should not take effect until the application had been determined.

9

Following the issue by both Gécamines and GTL of summonses challenging the freezing order, the active parties (that is all those other than the DRC) agreed, by consent order embodied in an Act of Court dated 29 th September, 2009, certain variations to the earlier order, notably that the disclosure provisions should be stayed and that the issues raised should be decided

“by way of an inter partes hearing to review the ex parte applications as to whether assets are available to satisfy the arbitration awards against [the DRC] in particular but not limited to the issues (1) as to whether [Gécamines] is an organ of [the DRC] and (2) if so, whether the Respondents have sovereign immunity to [Hemisphere's] claims”;

There was also to be a timetable for service of evidence and skeleton arguments with a view to a hearing with an estimated duration of five days. In the event, sovereign immunity as a potential defence subsequently dropped out of the picture.

10

Hemisphere's case that Gécamines is to be regarded as an organ of state of the DRC (“the personality issue”, to borrow a phrase coined in the Trendtex case to which we refer below) rests in part on Gécamines' historic constitution and related legislation concerning Congolese public enterprises, in part on recent but as yet incomplete legislative reforms, and in part on the relationship in practice between successive governments of the DRC and Gécamines. Gécamines, for its part, insists that both as a matter of legal formality and practice it is and has always been a duly constituted entity in its own right, wholly independent of the state, a position that has now been re-enforced by legislative reforms that began in April 2008 and are expected to be complete in the course of 2010.

11

Success for Hemisphere on this central issue would not, however, be the end of the matter. It is not disputed that, in those circumstances, the Shares could in principle be taken by Hemisphere in execution of its judgment....

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    • Court of Appeal
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    ...K. J. Lawrence for the Respondent. The First Respondent did not appear and was not represented. Authorities FG Hemisphere Associates [2010] JRC 195 . Trendtex Trading Corp -v- Central Bank of Nigeria [1977] 1 QB 529 CA . Kensington International Limited -v- Republic of Congo [2005] EW......
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