On 12 November 2020, the Court of Appeal handed down its judgment in Mousavi-Khalkali v Abrishamchi and another.
At first blush, the court’s judgment is surprising: Phillips LJ (with whom Newey and Floyd LJJ agreed) unanimously held that “it was difficult to see how” the claimant, a British-Iranian national, was subject to a “real risk” of not obtaining substantial justice in Iran in circumstances where there had been repeated and express warnings from the Foreign and Commonwealth Office (FCO) against British-Iranians travelling to Iran for fear of arrest. The court accordingly refused the claimant’s appeal against the order setting aside the grant of permission to serve his claim form on the respondents out of the jurisdiction in Iran.
Why did the first instance judge, and then the Court of Appeal, depart so drastically from the initial order granting the claimant permission to serve out of the jurisdiction? The answer lies in the various material non-disclosures found to have been made by the claimant in his application.
Background
Mousavi-Khalkali was a British-Iranian citizen and English resident. His claims against the defendants related to his business in providing professional services in the mobile phone industry in Iran; the first defendant being an Iranian national living in Iran and managing director of the second defendant, an Iranian telecommunications company.
At a high level, the claimant’s claims were for sums owed to him on account of:
- A personal loan to the first defendant (not part of the appeal).
- Outstanding fees for consultancy fees in relation to a telecommunications project.
- Outstanding fees for the claimant’s assistance in an arbitration between the defendants and a third party (Nokia) in respect of the same project.
On 28 February 2019, the claimant applied to the High Court for permission to serve his amended claim form out of the jurisdiction, and for a worldwide freezing order (WFO) in respect of the defendants’ assets. Those applications were granted on the basis of the claimant’s representations, in his sworn affidavit, that (inter alia) he had been resident in England since 1987 and he would not receive a fair trial in Iran by reference to the delay and corruption within the judicial system.
On 20 March 2019, the first defendant provided security such that the WFO ceased to have effect. Soon afterwards, the defendants filed and served their application challenging the jurisdiction of the court.
In determining their application, at first instance the judge found that all of the claimant’s claims had a real prospect of success, and that (except for the loan fee claim) all passed through a jurisdictional gateway for service out of the jurisdiction, but that since England was not the natural and appropriate forum for the claims, the claimant had to establish there was a real risk that he would not obtain substantial justice in Iran, which he had not done. The judge therefore set aside the grant of permission to serve the claimant’s claims out of the jurisdiction, and also ceded to the defendant’s application to set aside the WFO (a ruling that was not subject to the appeal).
The claimant appealed the first part of this ruling on the basis, inter alia, that the judge erred in finding that there was no real risk the appellant would not obtain substantial justice in Iran, because the risk that the claimant might be unwilling to travel there to litigate for well-founded reasons was not considered. In advance of the appeal, the claimant provided further evidence to this effect.
Substantial justice
The difficulty with the claimant’s case centred around his lack of credibility. The claimant was found to have made a serious of material non-disclosures in his application for permission. In particular, he did not mention that “since at least the early 2000s” he had spent the majority of his time in Iran, having married an Iranian national in 2007 with whom he shared a family home in Tehran; or that between 2016 and 2019 he had spent most of his time in Iran (during which time the FCO guidance had been in effect).
Although the claimant sought to argue that from 17 May 2019 onwards (that is, when more stringent guidance was released by the FCO) he had only travelled to the country out of personal necessity when his father passed away, the court noted that when he visited the country he had stayed for over three months; that he been photographed at various business meetings during that time; and that in light of his family’s standing within society, a representative of the Supreme Leader of Iran had attended his father’s funeral (rendering the submission that he was at “real risk” of detention unlikely).
The claimant’s appeal was therefore met with short thrift:
- First, the court noted that “nowhere” in the claimant’s affidavit or in his witness statement before the judge did he state that he would not be willing to travel to litigate his claims. Since the issue was not presented for determination, the court found that judge did not err in failing to expressly address it.
- Second, and in any event, the court found that even if such an issue had been raised, it would have been “roundly rejected” given the information now available to the court, and rightly so, since the claimant “ha[d] a wife and home [in Iran] and had lived there for most of the preceding three years”.
Costs
Finally, the court upheld the judge’s order that the claimant pay £325,000 to the defendants as a “reasonable sum on account of costs” in advance of a detailed assessment, the defendants’ total costs being £633,000.
In doing so, the verdict of the court was clear, and merits repeating for the claimants and practitioners alike:
“… the appellant chose to apply for draconian relief, did so without making full and frank disclosure and raised a panoply of issues and arguments throughout the proceedings. The costs of defending such proceedings with vigour will necessarily have been very substantial, regardless of the sums claimed.”
