Hardy Exploration & Production (India) Inc v Government of India [2018] EWHC 1916 (Comm) (25 July 2018)
On 25 July 2018, Macdonald Eggers QC (sitting as Deputy Judge of the English High Court) handed down a judgment discharging an Interim Third Party Debt Order (“ITPDO”) granted ex parte against the Government of India (“GOI”) and its debtor India Infrastructure Finance Company (UK) Limited (“IIFC (UK)”). The judgment was made in the context of enforcement proceedings of an arbitration award in excess of £70 million rendered against India in 2013.
The debt comprised a series of guarantee fees arising out of guarantees given by the GOI over loans advanced to IIFC (UK) by the Reserve Bank of India. The GOI and IIFC (UK) raised four grounds in support of the discharge of which the judgment addressed two, namely: the situs of the debt and that the debt was not “due or accruing due” as required by CPR Rule 72.
Regarding the situs of the debt, Macdonald Eggers QC held that English Courts did not have jurisdiction to grant a TPDO in respect of a debt situated outside of England and Wales, unless the TPDO would be recognised as discharging the debt by the law applicable at the situs. The Commercial Court noted that standard conflict of laws principles tend to identify that the situs of a debt is the place where the debt is properly recoverable and can be enforced, i.e. the place of residence of the debtor. Nevertheless, Macdonald Eggers QC held that the situs of the debt was not the place of residence of IIFC (UK), i.e. England. Instead, the Commercial Court identified that the situs of the debt was the place of the courts having jurisdiction to determine whether the relevant debt is properly recoverable or has been discharged, i.e. India.
The Court concluded that it did not have jurisdiction to grant a TPDO in the present case on the basis that the situs of the debt was located in India and that there was a real and substantial risk that the Indian Courts would not recognise the compliance with the TPDO as discharging IIFC (UK)’s of its liability.
The Commercial Court further held that the debt was not “due or accruing due” on the dates on which the ITPDO was granted and served due to the absence of actionable entitlement for the GOI to be paid on these dates.
The Commercial Court decision is available here: