Cayman Islands Court of Appeal hands down leading decision on Norwich Pharmacal order in Cayman and refuses permission to appeal to the Privy Council
The Essar group has had a set-back in the continuing disclosure action by commercial rival, ArcelorMittal, in connection with an unpaid arbitral award now well in excess of US$1.5 billion.
The CICA has dismissed an appeal by Essar Global Fund Limited (ultimate parent of the Essar group) and Essar Capital Limited (investment manager of the group) against an order that they must disclose financial information about Essar Steel Limited (in administration) (ESL) to ArcelorMittal in connection with non-payment of the arbitral award.
The judgment confirms that disclosure under the Norwich Pharmacal jurisdiction can be obtained in Cayman in support of proceedings in foreign jurisdiction and provides guidance on the legal test for actionable wrongdoing.
- The Evidence Order only concerns the giving of “evidence” and the Norwich Pharmacal jurisdiction cannot as a matter of principle relate to evidence at all: it is a duty to provide information about wrongdoing. There is no obvious reason why that duty should be confined to domestic wrongdoing.
- The reference to “contemplated proceedings” in the Evidence Order must be narrowly construed and cannot apply more generally to proceedings which the putative plaintiff is thinking of pursuing. If proceedings have not been instituted in a foreign jurisdiction and are not contemplated in a jurisdiction with pre-action disclosure protocols, there is no logical basis for impliedly excluding the Norwich Pharmacal.
- The test for obtaining Norwich Pharmacal relief when wrongdoing has not been established is the existence of a good arguable case. That expression has the meaning given to it in The Niedersachsen case.
- Wilful evasion of an arbitral award may constitute actionable wrongdoing. ArcelorMittal did not have to identify the particular statutory insolvency regimes which might be invoked before the Court is entitled to find an arguable case of wrongdoing. It was sufficient for ArcelorMittal to establish a good arguable case of wilful evasion of the arbitral award, since most jurisdictions recognise that such conduct is wrongful not merely in the generic sense but in the sense of affording a remedy. ArcelorMittal was able to point to circumstances which suggested that there had been a deliberate evasion of liability, which was then not explained away by Essar.
The judgment should be welcomed by all offshore practitioners who act in asset-tracing and enforcement matters, since Essar’s arguments, if accepted, would have significantly limited the ability of private parties to obtain information needed to pursue enforcement or other actions.
In a separate judgment, the CICA refused leave to appeal to the Privy Council, both on the basis that it did not concern a question respecting property or a right of the value of £300 or upwards, and because it was not a question of great general or public importance. The CICA noted that the provisions on leave to appeal should be strictly construed. The right in issue is ArcelorMittal’s right to have its application for Norwich Pharmacal relief property determined and is incapable of valuation in monetary terms. The decision involves the application to the facts of this case of established principles, and cannot be said to involve a question of great general or public importance.