Background
Degroma Trading Inc and Neriman Associates S.A. originally owned the vessels Diamond-T and Ruby-T. Under financing arrangements, they sold the vessels to Dreter 2 Ltd and Dreter 1 Ltd and leased them back under bareboat charters, with title intended to return after the financing was repaid. After the charters were terminated amid allegations of sanctions breaches, the claimants paid approximately US$18.2 million to an account nominated by the Dreter companies, but title was not transferred. The vessels were later sold to other entities.
The claimants alleged that the Dreter companies deceitfully represented that title would be transferred upon payment. They sought to join Panama-incorporated Interunity Management Corporation S.A. (IMC), alleging that it indirectly or de facto controlled the Dreter companies and their parent, Ocean Chem Holding Ltd, and was liable as a joint tortfeasor or participant in an unlawful-means conspiracy. Waksman J permitted IMC to be joined and served outside the jurisdiction. IMC applied to set aside that order for want of jurisdiction and, alternatively, because the claimants had not fairly presented the without-notice application.
The Court’s Holding
Bright J set aside the order insofar as it permitted IMC to be joined and served outside the jurisdiction. Although the underlying deceit allegations against the Dreter companies raised serious issues to be tried, the claimants had not shown a serious issue concerning their allegation that IMC controlled Ocean Chem or the Dreter companies or was their ultimate beneficial owner. The circumstantial material did not support the required inference, while formal beneficial-ownership notices and communications to US authorities identified Alexandra Mangos as Ocean Chem’s ultimate owner.
The order was also set aside because the application had not been fairly presented to Waksman J. The claimants failed to place the beneficial-ownership notices before him, did not fairly explain the significance of an email identifying Alexandra Mangos as ultimate beneficial owner, and gave a misleading impression that IMC headed a formal corporate group. Those omissions and ambiguities were material to whether the necessary-and-proper-party gateway for service out was satisfied.
Key Takeaways
- A properly arguable deceit claim against domestic defendants does not itself justify serving a foreign alleged joint tortfeasor; the claimant must establish a sufficiently arguable factual basis for that defendant’s involvement.
- When fraud or conspiracy is inferred from circumstances, the pleaded primary facts must make dishonesty more likely than an innocent explanation.
- Applicants seeking permission to serve outside the jurisdiction without notice must fairly identify material evidence against their case and clearly address the jurisdictional test and full-and-frank-disclosure duty.
Why It Matters
The decision reinforces the evidential discipline required before foreign parties may be drawn into English litigation through allegations of corporate control, joint tortfeasance, or conspiracy. Informal family and business connections, shared branding, and ambiguous references to a “group” were insufficient to overcome direct ownership records pointing elsewhere.
Bright J also emphasized that Commercial Court practitioners should structure applications for service out around the three-stage jurisdictional test and the Commercial Court Guide’s checklist, including a distinct treatment of full and frank disclosure, even when service out is only ancillary to another contested application.