Vol 7 (2010) - Issue 3

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Harms Offshore AHT ‘Taurus’ GmbH & Co KG Harms Offshore AHT ‘Magnus’ GmbH & Co KG v Alan Bloom Colin Dempster Thomas Burton Roy Bailey (as Joint Administrators of Oilexco North Sea Limited) Oilexco North Sea Limited (in Administration) [2009] EWCA Civ 632

Introduction
In what circumstances does the English court have jurisdiction to protect the assets of a company in administration in England from foreign process where those assets are outside the United Kingdom?
The Court of Appeal considered this question on appeal from a judgment of Robert Englehart QC, sitting as a deputy judge of the Chancery Division, Companies Court ([2009] EWHC 1620 (Ch)).

Background
The Company was incorporated in England, and carried on the business of offshore oil and gas exploration. On 7 January 2009 the Companies Court made an administration order as well as ordering, on the application of the Joint Administrators, that they be authorised to enter into a loan agreement with specific lenders and to draw down funds under that agreement to make such payments of post-administration liabilities as they considered would achieve the purpose of the administration. The Appellants were companies incorporated in Germany, and pre-administration creditors under time charterparties governed by English law and subject to arbitration in London.
On the date of their appointment the Joint Administrators informed the Appellants in writing that the Company had entered administration, that they had been appointed and that it would continue its business under their supervision whilst they attempted to realise a sale of the Company or its business or assets.
On 16 January 2009 the Appellants, without notice to the Joint Administrators, commenced proceedings in the United States District Court for the Southern District of New York (the 'District Court') under its admiralty and maritime jurisdiction seeking judgment for sums due from the Company under the charterparties and an attachment and garnishment of the Company's property in New York sufficient to satisfy those claims. The Appellants’ complaint to the District Court did not mention the fact (which the Appellants knew) that the Company was in administration, and that the charterparties contained London arbitration clauses. On 21 and 26 January 2009 the District Court made ex parte orders attaching the property of the Company within the Southern District of New York, and shortly thereafter writs of attachment and garnishment were issued against Company property, including property held for its benefit or moving through or within the possession of 19 banks. The Appellants did not inform the Joint Administrators of these proceedings or the attachments they had obtained until 24 March 2009.
On 15 May 2009, on the application of the Joint Administrators, Robert Englehart QC granted a mandatory injunction requiring the Appellants to use their best endeavours to procure the release of the two ex parte orders made by the District Court. The order also restrained the Appellants from taking any steps in the substantive proceedings they had commenced in the District Court. On 20 May 2009 the Court of Appeal heard the Appellants' urgent application for a stay of the order, and their appeal against it. The Appellants submitted that the hearing was urgent because the United States Bankruptcy Court in the Southern District of New York (the 'Bankruptcy Court') was due to hear an application by the Joint Administrators for the release of the attachments later that day.