BANKS AND ASSET FREEZING ORDERS
BANCO NACIONAL 0£ COMEROO HCfERIOR SNC V
EMPRESA DE rELECOMMUNICACIONES DE CUBA SA
[2007] EWCA CIV 662 (COURT OF APPEAL, CIVIL
DIVISION) (LORD PHILLIPS OF VifORTH MALTRAVERS CJ,
TUCKEY AND JACOB LJJ) (4 JULY 2007)
Whether the EngUsh High Court has jurisdiction to grant a
worldwide asset freezing order ('WO') and whether an equivalent
domestic asset freezing order ['DO') should contain the usual
undertaking to compensate persons caused loss by the DO.
BACKGROUND
A dispute arose between Baneo National de Comercio Kxterior
SNC ('BNC'), a state-owned Mexican bank and Emprcsade
Tele com municaciones de Cuba SA ['ETC'), the state-control led
Cuban telecommunications company. In Fcbiuary 2000, E T C
had entered into an agreemerit with BNC under which E T C
secured the repayment of loans provided by BNC to the National
Bank ot Cuba. ETC used the proceeds of its worldwide telecom
operations as security. The agreement was governed by Italian law
and subject to the exclusive jurisdiction of a Turin court. In April
2002, a Cuban government decree declared that the security provided
by ETC should be deemed legally null and void. BNC obtained
monetary judgment in Turin against ETC in November 2005. BNC
has songlit to enforce the judgment in countries to which Council
Regulation (EC) 44/2001 (the 'Regulation') applies. The Regidation
coTicerns jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters. In September 2006, the
Turin judgment was registered as a judgment of the English High
^g
September 2007
Court and BNC was granted a D O against E T C . The judge was
persuaded to omit the usual undertaking (the 'Undertaking')
for B N C to pay third party losses caused by complying with
the D O . In October 200S, B N C obtained a W O on ETC's
assets from the English High Court on the basis that E T C was
attempting to dissipate its worldwide assets.
CONCLUSION
Applying the Regulation and case law, the Court of Appeal
decided that it was inexpedient for the English courts to grant
B N C a W O . E T C was not resident in England. Any English
assets of E T C were protected by the D O and the W O was
only directed at assets outside England and Wales, There was no
connecting link at all between the subject matter of the measure
sought and the territorial jurisdiction of the English courts. It
is not rhepolicy of the Italian court to gram W O s . Given the
multiplicity of enforcement proceedings by BNC in other member
states there was a danger that an English W O would give rise
to disharmony ot confusion and/or risk there being conflicting,
inconsistent or overlapping orders in other jurisdictions. The
D O was varied to include [he Undertaking. An applicant for this
measure cannot say he will not give the Undertaking and say he is
entitled to the me;isure without it. Thete is nothing incompatible
with the Regulation in saying to an applicant who seeks a
particular measure in a particular jurisdiction that he musr take
the measure as he finds it or not at all.
Jonathan Lawrence
K6-£, Giilcs. jo 11 ntdiJH.InKTencelg)felonies.COIH, ivww.klgaus.com
Butterworths Journal of International Banking and Financial Law
I