FG Hemisphere Associates

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Bennett JA,Pleming JA
• Judgment Date: 14 July 2011
• Neutral Citation: [2011] JCA 141
• Date: 14 July 2011

[2011] JCA 141

COURT OF APPEAL

Before:

J. W. McNeill, Q.C., President; N. P. Pleming, Q.C., and; Sir Hugh Bennett.

Between

FG Hemisphere Associates LLC

RESPONDENT/ Representor

and

The Democratic Republic of Congo

First Respondents

La Generale des Carrieres et des Mines

Appellant/Second Respondent

and

Groupement pour le Traitement du Terril de Lubumbashi Limited

Appellant/Party Cited

Advocate J. Harvey-Hills for the Second Respondent and Appellant.

Advocate A. D. Robinson for the Party Cited and Appellant.

Advocate 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] EWHC 2684 (Comm.) .

Walker International Holdings -v- Congo [2005] EWHC 2813 (Comm.) .

I Congreso del Partido [1983] 1 AC 244 .

Kuwait Airways Corp -v- Iraqi Airways Co [1995] 1 WLR 1147 (HL) .

State Immunity Act 1978.

Propend Finance Pty Ltd v Sing and Anr [1997] EWCA Civ 1433 .

Tsavliris Salvage (International) Limited -v- Grain Board of Iraq [2008] EWHC 612 (Comm) .

Wilhelm Finance -v- Astillero Rio Santiago [2009] EWHC 1074 (Comm) .

Mellenger v New Brunswick Development Corpn [1971] 1 WLR 604 .

Czarnikow Limited -v- Rolimpex [1979] AC 351 .

Mayo Associates -v- Cantrade Private Bank [1998] JLR 173 .

Murphy -v- Stone Wallwock (Charleton) Limited [1969] 2 All ER 949 .

Mulholland -v- Mitchell [1971] 1 All ER 307 .

Terrien, Droit civil (1574).

Le Geyt Sur la Constitution Les Lois et Les Usages de Jersey (1847 edition), Book 2.

Routier, Principaux Generaux du droit civil et coutumier de la province de Normandie (1742), (second edition).

Pothier, Traité de la Procédure Civile.

Sociéte Eram Limited -v- Cie Intrenationale [2004] 1 AC 260 .

Galbraith -v- Grimshaw and Baxter [1909] 1 KB 339 .

Royal Court Rules.

Masri -v- Consolidated Contractors International Company SAL [2008] EWCA Civ 303 .

Dessain & Wilkins, Jersey Insolvency and Asset Tracing (3rd edition).

Eloury -v- JW Huelin Limited (1935) 238 Ex 326 .

Falle -v- Pocock (1949) 244 Ex 361 .

Kwok Chi Leung Karl -v- Commissioner of Estate Duty [1988] 1 WLR 1035 .

New York Life Insurance Co -v- Public Trustee [1994] 2 Ch 101 .

Kuwait Oil Tanker Co SAK and Another -v- Quabazard [2004] 1 AC 300 .

R -v- Lovitt [1912] AC 212 .

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

Cambridge Credit Corporation -v- Lissenden (1987) NSWLR 411 .

Compagnie Générale Transatlantique -v- Thomas Law & Co [1899] AC 431 .

United Capital Corporation Limited -v- Bender [2006] JLR 269 .

Mackinnon -v- Donaldson, Lufkin & Jenrette Securities Corporation [1986] Ch 482 .

Court of Appeal (Civil) Rules 1964.

Attorney General of Trinidad and Tobago v Smith [2009] UKPC 50 .

Foster v British Gas [1991] ICR 84, ECJ .

Foster v British Gas [1991] 2 AC 306 .

R v British Coal Corporation, ex parte Vardy [993] IRLR 104 .

Griffin v South West Water Services Limited (1995) IRLR 5 .

Brownlie Principles of Public International Law (7th ed).

Pittalis and another v Grant and another [1989] 3 WLR 139 .

Yates v. Reg's Skips Limited [2008] JCA 077B .

Svenska Petroleum Exploration AB v. Government of the Republic of Lithuania [2007] QB 886 .

Continental Transfert Technique Ltd v Federal Government of Nigeria and others [2009] EWHC 2898 .

Wilhelm Finance v. Ente Administrador Del Astillero Rio Santiago [2009] EWHC 1074 .

Democratic Republic of Congo, and others v FG Hemisphere Associates LLC [2010] 2HKLRD 66 .

Sovereign Immunity Act 1978.

UN Convention on Jurisdictional Immunities of States and Their Property (2004).

Tamlin v Hannaford [1950] 1 KB 18 .

Abdel Rahman v Chase Bank (C.I.) Trust Co Ltd [1984] JJ 127 .

NML Capital Ltd v Republic of Argentina [2011] UKSC 31 .

Bennett JA

THE PRESIDENT AND

1 In this judgment the following scheme is adopted:-.

	Paragraphs
Introduction	2 – 6
Parties	7 – 9
The Proceedings in Jersey	10 – 18
Background	19 – 22
Gécamines	23 – 30
The Form of the Trial Below	31 – 33
The Appeal by Gécamines	34
Failure to appreciate the centrality of corporate personality	35 – 39
The Proper Approach to the Functions Requirement	40 – 52
The required characteristics of the functions part of the test	53 – 84
Gécamines and the Functions Test	85 —101
The required characteristics of the control part of the test	102 – 108
Gécamines and the Control Test	109 – 125
New Evidence	126 —137
Conclusion in respect of the Gécamines’ Appeal	138
The Appeal by GTL
Whether an arrêt entre mains creates a right in rem	139 – 157
No arrest made	158 – 161
No Attachment of Future Movables	162 – 177
The proper test as to the place where the Debt is situated	178 – 190
The Evidence as to a place of business in the DRC	191 – 194
Inutility	195 – 197
Discretionary Factors	198 – 209
Leave to Adduce Fresh Evidence	210 – 212
Conclusion in respect of the GTL Appeal	213

Introduction

2 The Second Respondent (“Gécamines”) and the Party Cited (“GTL”) presented separate appeals against decisions and Orders made by the Samedi Division of the Royal Court on 27 October, 2010, FG Hemisphere Associates [2010] JRC 195 and 15 November, 2010.

3 The Royal Court, in brief:-

• (i) found and declared

  • (a) that Gécamines is an organ of the state of the First Respondent, and was so on 19 March, 2009;

  • (b) that the assets of Gécamines on 19 March, 2009, included both a holding of shares in GTL and certain payments which had been payable, were payable and should in the future become payable by GTL to Gécamines in terms of a Slag Sales Agreement to which Gécamines and GTL are parties, regarding cobalt-bearing and copper-bearing slag situated at Gécamines’ site in Lubumbashi, in The Democratic Republic of Congo (“DRC”); and

  • (c) that those assets were in each case situated within the jurisdiction of the Royal Court and were on 19 March, 2009, and remained, liable to execution in satisfaction or part satisfaction of two ICC arbitration awards against the DRC and a separate Congolese company, Hemisphere being the assignee of the benefit of those awards: see the judgment of 27 October, 2010, paragraph 196, and the Order of 15 November, 2010, paragraph 2;

• (ii) by the Act of Court of 27 October, 2010, granted interim conservatory relief;

• (iii) by the Act of Court of 15 November, 2010,

  • (a) granted leave to Hemisphere to effect execution of the Awards by way of distraint upon any and all assets of the First Respondent and Gécamines Jersey;

  • (b) ordered that the Act would operate as an acte d'arrêt entre mains confirmée as regards GTL in respect of the shares above referred to and the payments above referred to together with dividends and other rights accrued due to Gécamines in relation to those shares since 19 March 2009;

  • (c) directed payment of certain currently trapped monies;

  • (d) directed GTL to cooperate both in the obtaining of a valuation of the shares and either having title to the shares registered in the name of Hemisphere or causing the shares to be sold or otherwise realised to the benefit of Hemisphere;

  • (e) ordered disclosure by the First Respondent and Gécamines of all assets outside the geographical limits of the DRC together with documents and information and relating to various agreements, correspondence relating to payments, bank accounts and other related matters; and

  • (f) as regards GTL, made certain ancillary injunctions, ordered disclosure of documents and information on the same matters and made further ancillary provisions.

4 By its appeal Gécamines contends, in essence, (i) that it was not as at 19 March, 2009, or as at 27 October, 2010, and is not at the present time, an organ of State, in the relevant sense, of the DRC, (ii) that in reaching the contrary view the Royal Court misconstrued the requisite legal test for identifying an organ of State, (iii) that the Royal Court failed to apply the test required, and (iv) that upon the assumption that it had applied the correct test, the Royal Court's determination was not supported by the facts.

5 By its separate appeal GTL contends (i) that the relevant Gécamines’ assets were not situated within the jurisdiction of the Royal Court, (ii) that the interim arrêt entre mains was not properly made, (iii) that the interim arrêt entre mains did not create an immediate proprietary interest in favour of Hemisphere and (iv) that certain of the ancillary orders affecting GTL were oppressive, in particular the restraint from GTL changing its domicile, registered office or place of business and the extent of the disclosure provisions affecting it.

6 The following narration of salient matters is taken from the judgment in the court below where the Commissioner (H.W.B. Page QC) has set out the factual findings of the Royal Court with clarity and precision.

Parties

7 Hemisphere is a limited liability company organised in accordance with the laws of the State of Delaware, USA, and having its principal place of business at 60 East 42^nd Street, New York, USA. It is the assignee of the benefit of two ICC arbitration awards made against the DRC and a Congolese company Société National D'Electricité in April 2003 (“the Awards”). The validity of the assignment in November 2004 is not an issue. Despite world-wide efforts to recover on the awards, it is said that, over six years later, in excess of US$ 100,000,000 is still outstanding,...