Jersey Unreported Judgments

[2005]JRC049

royal court

(Samedi Division)

 

20^th April 2005

 

 

 

 

 

 

 

 

Application by the Defendant for a stay of proceedings relating to a claim by the Plaintiffs against the Defendant based on judgment obtained in Belgium for unpaid debts.

 

 

 

Advocate G.S. Robinson for the Plaintiffs.

Advocate C.G.P. Lakeman for the Defendants.

 

 

judgment

 

the deputy bailiff:

1.        This is an application by the defendant, which is known as 'Gécamines', for a stay of these proceedings.  The background to the application is as follows.  Gécamines is the State owned entity for the Democratic Republic of the Congo, to which we will refer as the "DRC".  It carries on mining activities in the Congo.  The DRC, we are told, has the fourth lowest GDP per capita of all countries. 

2.        The three plaintiff companies allege that Gécamines owes them substantial sums of money.  Gécamines has a branch in Belgium and the plaintiffs have obtained judgments against Gécamines in the commercial court of Belgium on various dates in 2004.  We do not think it is necessary to record them in detail; they are set out in the pleadings.  But in round terms the first plaintiff has a judgment in the order of 8 million euros; the second plaintiff has a judgment in the order of 11 million euros, together with the euro equivalent of 3.6 million dollars and the third plaintiff has judgment of just under 41 million euros. 

3.        In each case the judgments provide for continuing interest.  The judgments were not judgments in default.  Gécamines was represented before the Belgium court.  There was no application for any stay of the Belgium proceedings or of any enforcement of the judgments in Belgium; nor has there been any appeal lodged in respect of them. 

4.        On 29^th September, 2004, the plaintiffs issued proceedings in Jersey in respect of these judgments.  There are apparently some assets of Gécamines in Jersey.  An answer was filed.  There is no admission as to the Belgium judgments and Gécamines puts the plaintiffs to proof, but the only substantive defences raised would appear to be, first that the plaintiffs have no locus standi as the majority of their claims have been paid by a third party (we shall refer to this in a moment) and secondly, that enforcement would be contrary to public policy on the grounds that the judgements were not final and conclusive.

5.        Initially Gécamines contested the jurisdiction of this Court.  It issued a summons to that effect in December and this was due to be heard on 7^th February.  It was, however, withdrawn the day before with no papers in support having been filed.  Since then particulars of claim and an answer have been filed and the plaintiffs have applied for summary judgment; this is due to be heard before the Master on 26^th May. 

6.        The Court has received an affidavit from Mr Kabamba Wabisaaj who is the representative of Gécamines in Belgium.  He gives some of the background to this matter and his affidavit deals with the matters which underly this application for a stay.  It would appear that, on 13^th September, 2002 the Paris Club, which is a group of nation creditors whose rôle is to find co-ordinated and sustainable solutions to the payment difficulties of debtor nations, agreed to a rescheduling or restructuring of the DRC's external debt.  As part of that, the DRC committed itself to seeking comparable restructuring of the debts which it owed to other creditors.  The plaintiffs fall within that category. 

7.        It would appear that some progress may have been made in this respect, because we have been referred to an agreement entered into on 26^th June, 2003, between Gécamines and the plaintiffs.  In that agreement Gécamines acknowledged the debts which formed the basis of the Belgium judgments.  It waived any objection to the jurisdiction of the Belgium courts and it agreed to make certain payments in reduction of the amounts which it acknowledged owing.  However, it did not adhere to that agreement, and hence the plaintiffs instituted the proceedings in the Belgium court.

8.        It is clear from the evidence before us that the plaintiffs have in fact been indemnified by Euler Hermes in respect of a substantial proportion of the amounts owed by Gécamines.  Euler Hermes is a German Credit Insurance Company which operates in much the same way as the Export Credit Guarantee Department in the United Kingdom.  Nevertheless, it is asserted on behalf of the plaintiffs, and we can readily understand, that the plaintiffs are still obliged to pursue any debts in their own name and account to Euler Hermes for any recoveries in due course.

9.        In January 2005, the government of the DRC decided to open negotiations with the plaintiffs and Euler Hermes with a view to rescheduling the debts which underly the judgments, as they felt that the proceedings in Jersey might jeopardise the agreement reached with the Paris creditors.

10.      As a result a meeting took place on 27^th January, 2005.  Since then various exchanges have taken place and we have been referred to these.  No further meeting has, however, taken place.  We were handed today a letter dated 19^th April, from the relevant department of the DRC government to Euler Hermes, suggesting that a meeting should take place and that this should commence on 26^th April.  Certainly it is accepted by the plaintiffs that they are willing to negotiate with Gécamines or the DRC government over restructuring, but whether agreement will be reached on any such restructuring of the debts is, of course, uncertain.

11.      Mr Lakeman applies for a stay of these proceedings.  His primary submission is that there should be a general stay to allow the negotiations on restructuring to take place; but as an alternative he asks for a short stay to allow the meeting of 26^th April to take place.

12.      In his written submissions he referred the Court to a number of authorities.  We have to say that we do not consider these to be relevant.  There is no dispute, and Miss Robinson accepts, that the Court has an inherent jurisdiction to stay proceedings.  It also has a particular power conferred by the Rules, namely Rule 6/28, to stay proceedings for the purposes of alternative dispute resolution. 

13.      Mr Lakeman bases his application essentially on three grounds.  First, he relies upon the on-going negotiations.  He says that these are akin to alternative dispute resolution.  If the Court is willing to encourage ADR by staying proceedings, the Court should similarly encourage the attempts to reach agreement on the restructuring by granting a stay.

14.      Secondly, he says that the Court should take into account that Gécamines is owned by the DRC. That is a country with extreme economic difficulties and the plaintiffs were at all times aware that Gécamines was owned by the government of such a country. 

15.      Thirdly, he says that if judgment is obtained and the plaintiffs are able to enforce against local assets, this will give them a preferential position as compared with other creditors and might therefore jeopardise the international negotiations of the DRC with its international creditors as instanced in the agreement with the Paris creditors.  He relies upon the affidavit of Mr Wabisaaj in support of these submissions.

16.      The question of whether to grant a stay is a matter for the discretion of the Court.  Nevertheless there has to be some reason for a stay.  In normal circumstances a plaintiff is entitled to bring his claim to court and ask the court to adjudicate upon it.  As we say, there must be some reason why the court considers it to be in the interests of justice to grant a stay. 

17.      We have concluded that no valid grounds have been made out for a stay in this case.  We would summarise our reasons as follows:

(i)        There is no real dispute that the sum is owed.  There was an acknowledgment in the 2003 agreement.  There is no positive assertion before us that the amount is not owed; what is raised in the answer are certain non admissions and certain technical defences.

(ii)       The plaintiffs have in fact already given Gécamines considerable opportunity.  They did this through the 2003 agreement, but this was not adhered to by Gécamines.

(iii)      No objection was taken by Gécamines to the Belgium proceedings.  No application was made for a stay in that case in order to allow negotiations on restructuring to take place.  No suggestion was made that a granting of a judgment by the Belgium court might imperil international debt negotiations.  The point was simply not raised until January 2005.

(iv)      We take into account this is simply an action in Jersey to enforce sums which the Belgium court has already found to be due.

(v)       We see no reason why negotiations should not continue.  There is nothing to stop the meeting in April taking place whilst these proceedings take their course.  We do not consider that negotiations to restructure a debt which is not really disputed can be considered in the same light as alternative dispute resolution to resolve a dispute between parties. 

(vi)      We think there has already been considerable delay.  The agreement with the Paris creditors was reached as long ago as September, 2002, at which date it was said that the DRC would attempt to negotiate similar arrangements with other creditors.  There was the agreement of June 2003; there have been the Belgium proceedings; and there have been attempts to delay these proceedings by challenging the jurisdiction and then withdrawing.  It was only in January 2005 that the DRC appears to have opened negotiations to seek a restructuring with the plaintiffs in the light of these proceedings.  We think that it would not be in the interests of justice to add to that delay by granting a stay.  It is to be noted that we were told that the underlying debts arose sometime in 1995 or thereabouts.

(vii)     We see no reason why the plaintiffs should be precluded from enforcing the Belgium judgment.  They are not bound by the agreement with the Paris creditors.  It is a matter for them as to whether they consider that their interests are best served by holding back, or by seeking enforcement, or by agreeing to a restructuring.

(viii)    We do not consider that the fact that Gécamines is owned by a country which has considerable financial difficulties outweighs the matters which we have discussed earlier and leads to any suggestion that a creditor should not be able to enforce its claim, if it so wishes.  Ultimately, it seems to us, matters of this nature have to be dealt with by negotiation and agreement with creditors.  If a creditor wishes to take a firm line and enforce a claim which another court has already held to be due it seems to us that strong grounds would be required for the court to say that the creditor should be prevented or delayed in so doing.

18.      So for all these reasons, in the exercise of our discretion, we decline to order a stay and our decision applies equally to a short term stay as it does to the longer stay.  We therefore dismiss the application.  Costs given on the standard basis.

Authorities

Heerema -v- Heerema [1985-86 JLR293].

Wright -v- Rockway Limited [1994 JLR60].

Portsmouth -v- Rendle [1997 JLR244].

Yachia -v- Levi [1999 JLR Notes 6a].