UK: Insurance And Reinsurance Weekly Update - 3 June 2014

Last Updated: 17 June 2014
Article by Nigel Brook

Diag Human Se v Czech Republic

Whether a New York Convention arbitration award had become binding and so could be enforced in England

The claimant sought to enforce a New York Convention award made in the Czech Republic against the defendant. The defendant resisted enforcement on the ground that the award had "not yet become binding on the parties" (section 103(1)(2)(f) of the Arbitration Act 1996). Eder J held as follows:

(1) A decision by the Austrian Supreme Court (in separate enforcement proceedings) that the award is not binding gave rise to an issue estoppel between the parties, with the effect that the claimant could not argue otherwise. The judge rejected the claimant's argument that in proceedings to enforce under the New York Convention, issue estoppel cannot arise from decisions in other states on enforcement itself. The only conditions which had to be met were those affirmed by the Court of Appeal in The Good Challenger [2004]: (1) the judgment was given by a foreign court of competent jurisdiction; (2) the judgment is final and conclusive and on the merits; (3) there is identity of parties; and (4) there is identity of subject matter (i.e. the issue decided by the foreign court was the same as that arising in the English proceedings). Those conditions were met here.

(2) Even if there had been no issue estoppel, the judge would have found that the award was not binding. Having reviewed prior caselaw, Eder J concluded that if an award is subject to "ordinary recourse", rather than "extraordinary recourse", in the courts of its home jurisdiction, it will not be binding. However, he said he was "extremely reluctant to provide any definition of either category" and did not approve the claimant's argument that "ordinary recourse" should mean "a genuine appeal on the merits" (as opposed to an application to set aside, usually on procedural irregularity grounds). The judge held that here, the decision of the Municipal Court of Prague that two issues should be resolved by a review tribunal meant that the award was subject to a process of "ordinary recourse" and so was not binding.

(3) The judge also rejected the claimant's argument that it was entitled to an award of interest on the capital sum awarded by the tribunal. The claimant had argued that even if an award cannot be enforced in full, such part of the award in respect of which is there is no realistic or credible challenge can still be enforced and entitles the claimant to an award of interest (see IPCO v Nigerian National Petroleum Corporation (No 2) (Weekly Updates 17/08 and 41/08)). However, here there was no pending application in the foreign jurisdiction to set aside an award. Instead, the award was not binding and so: "In my view, that conclusion is fatal to any question of partial enforcement. I know of no case in which the English Court (or indeed any court) has permitted enforcement of any award in such circumstances i.e. which it has held is not binding. The fact that a particular sum may be said to be "indisputable" ... does not, in my view, justify the relief sought".

Hone & Ors v Abbey Forwarding

Court of Appeal assesses damages for the breach of a cross-undertaking where freezing injunction should not have been made and whether general damages can be awarded

As is customary, the respondents had provided a cross-undertaking in damages in return for the grant of a freezing order against the appellants. At first instance, the judge ordered the respondents to pay the appellants almost GBP 30,000 for losses suffered as a result of the freezing order (which, it was subsequently shown, had been made without justification). On appeal, having reviewed prior caselaw, the Court of Appeal agreed with the judge that the starting point for an assessment of those damages was that set out by Lord Diplock in Hoffmann-La Roche v Secretary of State [1975]: "The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction".

However, there was a caveat to that basic position: "Logical and sensible adjustments may well be required, simply because the court is not awarding damages for breach of contract. ...The court is compensating for loss caused by the injunction which was wrongly granted. It will usually do so applying the useful rules as to remoteness derived from the law of contract, but because there is in truth no contract there has to be room for exceptions. In my judgment, the law also meets the justice of the matter. A defendant wrongly injuncted should be compensated for losses that he should not have suffered, but a claimant should not be saddled with losses that no reasonable person would have foreseen at the time when the order was made, unless the claimant knew or ought to have known of other circumstances that was likely to give rise to the particular type of loss that occurred in the case at hand. A claimant may, however, find himself liable for losses which would not usually be foreseen in particular cases. One such case may be if a loss, not usually foreseeable, arises before a defendant has had any real opportunity to notify the claimant of the likely loss or sensibly to apply to the court for a variation".

Applying these principles to this case, an additional GBP 10,000 was awarded. However, the Court of Appeal also said that the appellants could not claim for loss of individual investment or earning possibilities if those possibilities had never been mentioned to the respondents. They could not simply argue that, given the respondents' attitude to the administration of the freezing order, there had been no point in discussing potential investments with them.

The Court of Appeal further held that general damages for distress and anxiety were recoverable in respect of a cross-undertaking (even though such damages are not usually recoverable for a breach of contract). In this case, there had been the aggravating feature of the "needlessly aggressive approach" of the respondents' solicitors to the administration of the order. The Court of Appeal ordered GBP 15,000 to be paid to each of the three appellants under this head (instead of the GBP 8,000 ordered by the judge).

Dar Al Arkan & Anor v Al Refai

Court of Appeal confirms that the English courts have jurisdiction to commit a foreign director of a foreign company for contempt

The first instance decision in this case was reported in Weekly Update 01/14. The claimant foreign company was in contempt of court for breaches of court orders and Smith J held that the claimant's managing director (who is domiciled and resident in Saudi Arabia) could be served with committal proceedings because the English court had jurisdiction under CPR r81.4 to make a committal order against the director. The director appealed against that decision.

The Court of Appeal has now unanimously dismissed that appeal. Although CPR r81.4 (which provides that a committal order can be made against the director of a company which is in breach of a judgment, order or undertaking) does not expressly have extra-territorial effect, the Court of Appeal held that the legislative intention behind the rule was that it should have such an effect. That was because, absent such a power, the English courts would have "significantly weakened" powers to deal with contempt of its orders by companies with foreign directors. In reaching this conclusion, Beatson LJ noted that following the introduction of the CPR, "the general position is that reference to authorities under the former rules is generally no longer relevant and the courts generally refuse to look at equivalent provisions in the RSC as an aid to interpretation".

The Court of Appeal also drew a distinction between this case and Masri v Consolidated Contractors (see Weekly Update 30/09), where the House of Lords held that the English courts did not have jurisdiction to order the examination of a foreign director of a debtor company under CPR r71: "In my judgment, the nature of committal proceedings is very different from the nature of the power of the court under Part 71 to obtain information from judgment debtors" (as per Beatson LJ).

Furthermore, the judge had been correct to exercise his discretion to give permission for service out. That was because the notice of the committal application did fall within the meaning of a "claim form" under CPR r6 as it commenced "proceedings", which in turn included committal proceedings.

The Court of Appeal also referred to Article 22(5) of Regulation 44/2001 which provides that, in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced shall have exclusive jurisdiction, "regardless of domicile". At first instance, the judge held that this Article did not apply because the director was not domiciled in an EU Member State. In reaching that conclusion, the judge said that he was bound by the Court of Appeal's decision in Choudhary & Ors v Bhatter & Ors (see Weekly Update 44/09). Although not required to decide the point, the Court of Appeal nevertheless expressed the view that, in light of ECJ caselaw, there was a "compelling" argument that Choudhary was incorrectly decided and that the English courts did have jurisdiction under the Article, no matter where the defendant is domiciled.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Nigel Brook
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.