NKT v NMH et al

The Claimants obtained a $1.6 billion arbitral award against D1 (Mr Barzani), which they seek to enforce against shares in the BVI parent company of an Iraqi oilfield services group. The shares are registered in the name of D2 (Mr Shani), who the Claimants allege to be Mr Barzani’s nominee.

The Claimants enforced the Award against Mr Barzani in the BVI, obtained a provisional charging order over the shares, joined Mr Shani as a party to the proceedings, and were granted permission to serve him out of the jurisdiction. Mr Shani sought to set the ex parte order aside on the basis that there was no pleaded claim against him, no basis on which to join him, no available jurisdictional gateway, and therefore no jurisdiction to make a charging order over shares registered in his name. He asserted that the procedure adopted put him “on the back foot”, and a dispute about the ownership of the shares should be resolved in separate proceedings brought against him. The Court rejected these arguments, and directed a trial of the dispute as to beneficial ownership within the charging order application. Mr Shani appealed.

In dismissing Mr Shani’s appeal, the Court clarified three important points.

• First, a party may be joined to proceedings post-judgment, even if there is no pleaded claim against them, where desirable to resolve an issue relevant to enforcement.
• Second, the 'necessary or proper party’ gateway is no less wide than the power to join a party, so that if it is right to join a party to the proceedings, permission may be granted to serve them out of the jurisdiction. Further, the ‘enactment’ gateway permits service out where a claimant seeks a charging order (under s.14 of the Judgments Act 1838).
• Third, a charging order creates proprietary rights over property beneficially owned by a judgment debtor, and so may be made over property within the Court’s territorial jurisdiction without the need to establish in personam jurisdiction over the legal owner. The rules ensure that interested persons (including the legal owner) are notified out of fairness, and so that they may decide whether to press an objection. However, a nominee holding shares in a BVI company cannot resist enforcement through jurisdictional objections.

Ben Valentin KC and Andrew Trotter appeared for the successful respondents, with Claire Goldstein and James Petkovic of Harneys, Westwood & Riegels, and instructed by Jones Day and Meysan Partners. The full judgment is available here.