In the recent case of ADM Rice Inc v Corporacion Comercializadora De Granos Basicos SA and others, a High Court judge decided that the defendant Nicaraguan company and two of its directors and officers were in contempt of court for failure to comply with two court orders. He sentenced the directors to 18 months imprisonment each as they were responsible for the company’s failure to comply with the orders.
The company had been unsuccessful in arbitration proceedings with the claimant. In order to enforce the awards, the claimant obtained a freezing order with ancillary disclosure provisions against the company. The freezing order was confirmed in a subsequent order in similar terms. Both orders contained a penal notice warning the company and its directors of the consequences of non-compliance with its terms. The judge found that the orders had been properly served on the company and its directors but they had not been complied with in any respect.
In the view of the judge, a sentence of 18 months imprisonment was justified on the basis that this was “a blatant case of a complete blanket refusal to comply with court orders”. He considered that the company and its directors had wilfully chosen to ignore the dispute resolution process with which they had previously engaged.
The decision illustrates that deliberate breaches of disclosure orders under freezing orders, are considered to be serious and may result in an immediate substantial sentence of imprisonment. It is also a reminder that, although the burden of proof is high, an application for committal can be a useful tool to ensure compliance with orders to enable a claimant to identify and secure any relevant assets.
Chris Harper is a partner and head of the dispute resolution team in Exeter. He specialises in commercial litigation and is named as a leader in his field by independent guides to the legal profession Legal 500 and Chambers. To contact Chris please call 01392 210700 or email drx@stephens-scown.co.uk