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The case of Hardy Exploration & Production (India) Inc v Government of India  EWHC 1916 (Comm) concerned an application for a discharge of an interim third party debt order, where the court provided detailed analysis of the principles to consider when deciding the situs of the debt for the purpose of a third party debt order. Written by Clifford Woodroffe, partner at Lee Bolton Monier-Williams.
HHJ Egger (sitting as a Deputy Judge in the High Court) provided useful guidance in the form of seven principles which should be considered when evaluating jurisdiction in the context of third party debt orders:
In 2013 the claimant obtained an arbitration award from the Government of India in relation to a dispute over gas/oil exploration rights in Indian territorial waters. An enforcement order was made in 2017 (and which is subject to an appeal to be heard later this year). In February 2018, the claimant made a without notice application for an interim third party debt order under CPR 72. The interim third party debt order was granted since there existed a debt due or accruing by the third party to the judgment creditor and it prevented IIFC UK (the third party) paying a debt it owed to the Government of India in the amount of £70,528,107.04. IIFC UK's debt to the Government of India arose from interest payments due and payable every six months to the Reserve Bank of India under a bond subscription agreement.
IIFC UK applied for the discharge of the interim order on four grounds, although the judgment was only concerned with the grounds that (1) the debt owed by IIFC UK was enforceable in India and payment pursuant to an order of the English Court would not discharge the debt as a matter of Indian law; and (2) the debt owed by IIFC UK was not due or accruing due on the date the interim order was made.
The court decided it had no jurisdiction to make a third-party debt order. Firstly, the debt was situated in India not England and Wales; and second, it had not been established that the Indian Court would recognize IIFC UK's debt as being discharged by its compliance with the third party debt order.
HHJ Eggers reviewed numerous authorities to determine the situs of the debt, before setting out the above list of principles. Expert evidence was used to attempt to determine whether or not an Indian Court would recognize IIFC UK's debt as discharged, but the parties’ experts did not agree whether this would be recognized (it was not clear whether or not a jurisdiction agreement would be classed as valid).
Therefore the application to discharge the interim third party debt order was granted.
Clifford Woodroffe is a partner at Lee Bolton Monier-Williams, and a member of LexisPSL’s Case Analysis Expert Panel. Suitable candidates are welcome to apply to become members of the panel. Please contact firstname.lastname@example.org.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
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