Fairfield Sentry Ltd ((in Liquidation)) & Krys v Citco Bank Nederland NV and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 28 February 2012
• Neutral Citation: [2012] IEHC 81
• Court: High Court
• Date: 28 February 2012

Fairfield Sentry Ltd (in Liquidation) & Krys v Citco Bank Nederland NV & Ors

COMMERCIAL

BETWEEN

FAIRFIELD SENTRY LIMITED (IN LIQUIDATION) AND KENNETH KRYS

PLAINTIFFS

AND

CITCO BANK NEDERLAND NV, STICHTING SHELL PENSIOENFONDS AND ATLANTA BUSINESS INC.

DEFENDANTS

[2012] IEHC 81

[No. 6631 P/2010]

[No. 239 COM/2010]

THE HIGH COURT

CONFLICT OF LAWS

Jurisdiction

Company law - Liquidation - Recognition of winding up and liquidator - Jurisdiction - Whether court had inherent jurisdiction to recognise foreign liquidation - Contract - Terms - Bank - Whether Irish or Dutch laws applied to contractual terms of bank account - Banking law - Place of performance of payment obligation - Whether bank obliged to pay in place where account held - European Union law - Recognition and enforcement of judgments - Whether Dutch orders of conservatory attachment should be recognised in Ireland - Whether Dutch legal process constituted "complete system" - Whether existence of separate process for lift ex parte order constituted incomplete system - Whether Dutch orders of conservatory attachment granted ex parte were judicial decisions which were or were capable of being subject of enquiry in contested proceedings - Reference to European Court of Justice - Whether court should exercise discretion to refer matters to European Court of Justice - Whether recognition of Dutch orders of conservatory attachment contrary to Irish public policy - Whether principle of pari passu distribution amongst unsecured creditors in liquidation a fundamental principle of Irish law - Whether recognition of conservatory attachment orders manifestly contrary to public policy of Ireland - Banco Ambrosiano SPA v Ansbacher Co [1987] ILRM 669, Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508, Clare & Co v Dresdner Bank [1915] 2 KB 576, Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728, Walsh v National Irish Bank [2007] IEHC 325 (Unrep, McKechnie J, 4/5/2007), Joachimson v Swiss Bank Corporation [1921] 3 KB 110, Richardson v Richardson [1927] P 228 approved - Denilauler v SNC Couchet Frères (Case 125/79) [1980] ECR 01553, Reichert v Dresdner Bank AG (Case C261/90) [1992] ECR I-02194, Hengst v Campese (Case C-474/93) [1995] ECR I-02113, Maersk Olie & Gas A/S v Firma M de Haan en W de Boer (Case C-39/02) [2004] ECR I-09657, Komback v Bamberski (Case C-7/98) [2000] ECR I-01935 and Apostolides v Drams (Case C-420/07) [2009] ECR I-03571 considered - Brussels Convention on Jurisdiction and the Enforcement of Judgment in Civil and Commercial Matters 1968, arts 2, 5, 18, 24 & 25 - Regulation 44/2001/EC, arts 2, 4, 22, 23, 31, 32, 33 & 34 - Treaty on the Functioning of the European Union, art 267 - Winding up and liquidation recognised, declarations that Dutch orders of conservatory attachment not entitled to recognition refused (2010/6631P & 2010/239COM - Finlay Geoghegan J - 28/2/2012) [2012] IEHC 81

Fairfield Sentry Ltd (in liquidation) v Citco Bank Nederland BV

Facts: A dispute arose between the plaintiffs and defendants as to whether Citco held monies in a Dublin Account subject to orders of conservatory garnishment issued by the Dutch courts at the request of Shell and Atlanta, defendant parties to the proceedings. Further declarations were sought recognising and enforcing the winding up of the plaintiff and the appointment of liquidators thereto, as well as a declaration that the orders of conservatory garnishment made by the Dutch courts was not entitled to recognition. Dutch law experts were retained in the proceedings. The Court considered the impact of Council Regulation No. 44/2001/EC and whether the Custodian Agreement, the place of performance of the payment obligation, the nature of the Dutch orders, whether the orders were judgments within the meaning of the Regulation, whether public policy precluded the recognition of the judgments pursuant to the Regulation and whether the Dutch orders pre-booked the monies.

Held by Finlay Geoghegan J. that the plaintiffs were entitled to the declarations sought to the recognition of the order for winding up of Fairfield and the appointment of a liquidator. The plaintiffs were not entitled to the declarations that the orders of conservatory garnishment were not entitled to recognition in the State pursuant to the Regulation. The plaintiffs were not entitled to the declaration sought that Citco held the monies in the Dublin Account to the order of the liquidator. A preliminary reference pursuant to Article 267 TFEU was not required. The Dutch courts were not exercising jurisdiction pursuant to Article 31 of the Regulation in making the orders of conservatory garnishment and they were not judgements pursuant to Article 32 of the Regulation.

Reporter: E.F.

COMPANIES ACT 1963 PART XI

EEC REG 44/2001 PART III

DRUMM (A BANKRUPT), IN RE UNREP DUNNE 13.12.2010 (EX TEMPORE)

CAMBRIDGE GAS TRANSPORTATION CORP v OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF NAVIGATOR HOLDINGS PLC & ORS 2007 1 AC 508 2006 3 WLR 689 2006 3 AER 829

BANCO AMBROSIANO SPA & ORS v ANSBACHER & CO LTD & ORS 1987 ILRM 669

EEC REG 1346/2000

CLARE & CO v DRESDNER BANK 1915 2 KB 576

LIBYAN ARAB FOREIGN BANK v BANKERS TRUST CO 1989 QB 728 1989 3 WLR 314 1989 3 AER 252

WALSH v NATIONAL IRISH BANK LTD 2008 2 ILRM 56 2007/59/12726 2007 IEHC 325

N JOACHIMSON (A FIRM) v SWISS BANK CORP 1921 3 KB 110

RICHARDSON v RICHARDSON 1927 P 228

LINDETEVES v MEILINK 1955 NJ 698

EEC REG 44/2001 ART 31

EEC REG 44/2001 ART 2

EEC REG 44/2001 ART 4

EEC REG 44/2001 ART 22

EEC REG 44/2001 ART 23

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 24

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 2

MIETZ v INTERSHIP YACHTING SNEEK BV 1999 ILPR 541 1999 ECR I-2277

VAN UDEN MARITIME BV (T/A VAN UDEN AFRICA LINE) v KOMMANDITGESELLSCHAFT IN FIRMA DECO-LINE 1999 QB 1225 1999 2 WLR 1181 1999 1 AER (COMM) 385 1999 AER (EC) 258 1998 ECR I-7091 1999 ILPR 73

EEC REG 44/2001 ART 32

EEC REG 44/2001 ART 34(1)

EEC REG 44/2001 CHAP III

DRAKA NK CABLES LTD & ORS v OMNIPOL LTD 2009 BUS LR D134 2009 ECR I-3477

DEUTSCHE GENOSSENSCHAFTSBANK v BRASSERIE DU PECHEUR SA 1986 2 CMLR 496 1985 ECR 1981

EEC REG 44/2001 ART 33

EEC REG 44/2001 ART 33(3)

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 26

DENILAULER v SNC COUCHET FRERES 1981 1 CMLR 62 1980 ECR 1553

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 25

EEC REG 44/2001 RECITAL 19

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 27(2)

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 46(2)

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 47(1)

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 32

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 31

REICHERT & ORS v DRESDNER BANK (NO 2) 1992 ILPR 404 1992 ECR I-2149

FIRMA HENGST IMPORT BV v CAMPESE 1995 ILPR 587 1995 ECR I-2113

CIVIL CODE OF THE ITALIAN REPUBLIC ART 645

MAERSK OLIE & GAS A/S v FIRMA M DE HAAN & W DE BOER 2005 1 CLC 479 2004 ECR I-9657

V (P) (A MINOR) v COURTS SERVICE & ORS 2009 4 IR 264 2009/56/14351 2009 IEHC 321

MAGUIRE v SOUTH EASTERN HEALTH BOARD 2001 3 IR 26 2003/33/7876

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 267

BAMBERSKI v KROMBACH 2001 QB 709 2001 3 WLR 488 2001 AER (EC) 584 2000 ECR I-1935 2001 ILPR 36

CONVENTION ON JURISDICTION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 (BRUSSELS CONVENTION) ART 27(1)

APOSTOLIDES v ORAMS 2011 QB 519 2011 2 WLR 324 2010 1 AER (COMM) 950 2009 ECR I-3571

INSOLVENCY ACT 2003 S207 (BRITISH VIRGIN ISLANDS)

1 1. This judgment is given following the full hearing of the plaintiffs' claim against the defendants in these proceedings. I have previously delivered a judgment, on 5 ^th May, 2011, to challenges made by the second and third named defendants to the jurisdiction of this Court. For clarity of this judgment, I propose briefly repeating the background to the present proceedings in Ireland.

Background to Proceedings in Ireland

2 2. The first named plaintiff, Fairfield Sentry Limited (In Liquidation) ("Fairfield"), is a company incorporated in the British Virgin Islands to operate as an investment fund. Its stated objective was to achieve capital appreciation of assets which it sought to do primarily through investment with Bernard L. Madoff Investment Securities LLC ("BLMIS"). Approximately 95% of the assets of Fairfield were invested in BLMIS. On 21 ^st July, 2009, Fairfield was ordered to be wound up by the High Court of Justice of the Eastern Caribbean Supreme Court pursuant to the insolvency laws of the British Virgin Islands. The second named plaintiff (the liquidator) was one of two joint liquidators appointed by the Court. Ms. Joanna Lau, subsequently replaced the original joint liquidator and had been joined as a third named plaintiff. On the first day of the hearing, the Court was informed that Ms. Lau is no longer acting as liquidator and an order was made removing her as a plaintiff herein.

3 3. The first named defendant, Citco, is a Dutch bank incorporated under the laws of the Netherlands, domiciled there, and with a branch in Ireland and registered under Part XI of the Companies Act 1963 (as amended).

4 4. Fairfield has...