UK Court Validly Assumed Jurisdiction Under Section 1140 of English Companies Act: Delhi High Court

High Court Affirms Enforcement of UK Court’s Summary Judgment in USD 47.7 Million Trade Finance Case - The Delhi High Court has upheld the enforcement of a summary judgment issued by the UK Court in a complex trade finance dispute, rejecting the objections raised by Gaurav Dhawan, the appellant. The High Court’s judgment, delivered by a bench comprising Justices Rajiv Shakdher and Amit Bansal, emphasizes the validity of the UK Court’s jurisdiction and the applicability of UK law, reinforcing the principles of cross-border judicial cooperation and enforcement of foreign judgments.

The case involves Phoenix Global DMCC, a company incorporated in the UAE, which had secured two uncommitted revolving trade finance facilities totaling over USD 44 million from the Asian Trade Finance Fund and Asian Trade Finance Fund-2. These facilities were backed by corporate guarantees from Phoenix Commodities Private Limited, a BVI-based company, and personal guarantees from Gaurav Dhawan. Following defaults in repayment, TransAsia Private Capital Limited, acting on behalf of the lenders, initiated legal proceedings in the UK Court, resulting in a summary judgment in favor of the lenders for USD 47,779,823.02 plus costs and interest.

The High Court noted that the UK Court assumed jurisdiction based on the registered address provided by Gaurav Dhawan in the UK, in compliance with Section 1140 of the English Companies Act, 2006. This provision permits service of documents at a director’s registered address, irrespective of the director’s actual residence. The court stated, “The appellant was validly served in accordance with Section 1140 of the [English] Companies Act, which bestows jurisdiction upon the UK Court.”

Despite the personal guarantees stipulating the governing laws of DIFC and Singapore, the UK Court applied UK law under the ‘default rule’. The High Court supported this decision, emphasizing that the appellant failed to contest the applicability of UK law during the proceedings. “The appellant did not plead the invocation of any other specific set of laws, thus the UK Court appropriately applied its own laws,” the bench observed.

The High Court also upheld the UK Court’s summary judgment as being on merits, noting that the UK Court had examined the evidence presented by the respondent. “The judgment was rendered after a detailed analysis of the evidence, satisfying the requirements of a judgment on merits,” stated the court.

Justice Amit Bansal remarked, “The conclusion of the UK Court that it had jurisdiction is based on a thorough interpretation of Section 1140 of the English Companies Act and is consistent with international principles of judicial cooperation.”

The Delhi High Court’s dismissal of the appeal reaffirms the enforceability of foreign judgments in India, provided they meet the criteria outlined in Section 13 of the CPC. This ruling highlights the judiciary’s commitment to upholding contractual obligations and fostering an environment conducive to international trade and finance. The decision is expected to have significant implications for the enforcement of foreign judgments in India, particularly in cases involving complex cross-border financial transactions.

Date of Decision: July 19, 2024

Gaurav Dhawan v. TransAsia Private Capital Limited