Background
SOCAR and three related companies obtained awards in three arbitrations against Mubariz Mansimov and Palmali companies, including two arbitrations seated in London. The awards ordered payment of about US$240 million plus interest and costs, but—with the exception of about £107,000 in costs—remained unpaid. The claimants alleged that restructurings in 2018 and 2020 transferred Palmali interests for no or nominal consideration to place assets beyond their reach.
The claimants brought English proceedings under section 423 of the Insolvency Act 1986, for inducing or procuring non-payment of the awards under the so-called Marex tort, and for unlawful-means conspiracy. Jacobs J permitted service of the claim outside the jurisdiction. The foreign defendants applied to set that order aside, requiring the claimants to show a serious issue to be tried, an applicable jurisdictional gateway, and that England and Wales was clearly the appropriate forum.
The Court’s Holding
Mr Justice Birt dismissed the set-aside application except as to the Marex tort claim. The evidence raised triable issues over whether the transferred interests had substantial value and whether the restructurings were intended to prejudice creditors. The section 423 claim had a sufficient English connection because the relevant obligations arose under English-law agreements requiring London arbitration and the alleged transfers were said to frustrate awards likely to result from those arbitrations. The related conspiracy claim could proceed insofar as its alleged unlawful means rested on section 423.
The Marex claim disclosed no serious issue to be tried. That tort protects rights under an existing judgment or arbitral award, whereas the pleaded restructurings occurred months or years before the English awards were made and, in part, before arbitration began. The Court also found the statutory and surviving conspiracy claims within the service-out gateways and held England clearly the most appropriate forum, despite the foreign parties and transfers, given the English awards, underlying English-law contracts, London arbitral proceedings, and the multi-jurisdictional nature of the restructurings.
Key Takeaways
- An alleged attempt to frustrate awards arising from English-law contracts and London-seated arbitrations can provide the connection needed for an extraterritorial section 423 claim.
- The Marex tort does not extend to asset transfers made months or years before any judgment or award existed or was imminent.
- Service abroad remained authorized for the section 423 claim and the conspiracy claim based on it, with England found clearly the most appropriate forum.
Why It Matters
The decision confirms that the English courts may entertain creditor-protection claims concerning entirely foreign transfers when those transfers allegedly target the enforcement of anticipated English arbitral awards. It also places a significant temporal limit on the Marex tort: pre-award asset dissipation must be addressed through another established cause of action, not by treating a future award as though it already existed.