In a judgment handed down on 2 October 2014 in Cruz City 1 Mauritius Holdings v Unitech Limited & Ors, the English High Court made an order under s37 of the Senior Courts Act 1981 for the appointment of receivers over the foreign assets of two foreign Defendants, as well as ancillary orders it considered necessary to render that order effective, to assist the Claimant in realising an arbitration award in its favour. In doing so, the English Court emphasized yet again its commitment to the policy that arbitration awards should be enforced.


The application under s37 of the Senior Courts Act 1981 (“s37”) was the latest step in attempts by the Claimant (“Cruz City”) to enforce against two Defendants (“Unitech” and “Burley”) a London LCIA award it had obtained in July 2012 for almost US$300 million (at the time of the judgment, around US$350 million including interest).

Under s37 “the English High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so“. On 23 May 2013, the English Court made an order under s37 that Unitech and Burley should disclose all their assets worldwide exceeding US$1 million, and that the third Defendant (“Arsanovia”) should disclose all of its assets worldwide (see our earlier post here). The Defendants’ appeal of that order was struck out as of 5 December 2013 after they failed to satisfy the conditions attached to their permission to appeal, namely that they pay some US$334 million into court in respect of judgment debts plus £182,882 in respect of costs. Yet the Defendants still did not provide the disclosure ordered.

On 10 April 2014, the English Court granted an ex parte application by Cruz City for a worldwide freezing order, which imposed disclosure obligations on Unitech going beyond those imposed by the May 2013 order. On 30 April 2014, the day before the return date for that application, the Defendants finally gave disclosure of their assets.

By that time, Cruz City had made a further application, for the appointment of receivers by way of equitable execution over the property of Unitech and Burley. Following the Defendants’ disclosure of their assets, Cruz City’s application became more focused, such that it concerned only Unitech’s shareholdings in four companies, URRL, UOL, Nuwell and Technosolid.

On 26 August 2014, Cruz City obtained permission to join URRL, Nuwell, Nectrus (a company 100% owned by URRL and Nuwell, each 100% owned by Unitech), Technosolid and UOL to the proceedings for the purpose of seeking relief against those companies directly; the order made on 2 October 2014, however, was made only against Unitech and Burley.

Arguments of the parties

Cruz City submitted that this was a classic case for the appointment of receivers in view of (a) the opaque manner in which Unitech holds its assets through multiple chains of companies; (b) the resulting difficulty in identifying and realising the value in the shares held by Unitech; (c) a real concern that such opacity would be used by it to act in breach of the freezing order; and (d) the difficulties of enforcement abroad (particularly in India, where the majority of Unitech’s assets were situated, but also in Cyprus and the Isle of Man). In those circumstances, it was submitted that the appointment of receivers was likely to provide significant assistance to Cruz City in securing satisfaction of the award.

Unitech and Burley submitted that the application should be refused for four principal reasons. First, receivership is an exceptional and far-reaching remedy, not to be imposed unless ordinary means of enforcement are impossible or impracticable, whereas here it was open to Cruz City to seek to enforce the award in India or in any other jurisdiction where Unitech had assets. Second, the appointment of a receiver would to a large extent be fruitless because it would not be recognised by the courts in India, the Isle of Man or Cyprus. Third, the order sought went too far, in particular in requiring Unitech and Burley (a) not to impede the receivers from acting and (b) to appoint the receiver as their representative for the exercise of shareholder rights, which, it was argued, would put the Defendants in the position where they were either in contempt of the English court or could not resist enforcement with arguments properly open to them. Finally, the Defendants said that payment of the award was impossible without the permission of the Reserve Bank of India, which there was no prospect of obtaining.


Males J was satisfied that it was just and convenient to make an order for the appointment of receivers, and that it was necessary and appropriate to include the ancillary orders required in order to render that order effective. He noted the following points in particular.

  • Unitech held its assets through multiple chains of companies in a variety of jurisdictions, many of which do not afford transparency as to the assets held. It was impossible to tell from the information available what the underlying assets were which represented the value of the shareholdings held by Unitech or how the value of those shareholdings could best be realised. Receivers armed with the proper information would be able to take appropriate steps to realise maximum value from those shares.
  • Recovery of the award debt by other processes of execution was not practicable, at least in any reasonable timescale. It was moreover not open to the Defendants to argue that enforcement abroad was not impossible or impracticable, in circumstances where the Defendants had taken the position in the Indian courts that enforcement there was impossible, and they had shown themselves determined to ensure that it was impracticable anywhere.
  • A receiver will not be appointed if the court is satisfied that the appointment would be fruitless, for example because there is no property which can be reached either in law or equity. However, in this case, Males J was not convinced that the appointment of receivers would be fruitless. On the contrary, there was a real prospect that it would side-step the multiple obstacles which the Defendants seemed determined to place in the way of other means of enforcement. It was irrelevant that the local courts would not recognise the appointment of receivers over assets in their jurisdiction – the sanction of contempt proceedings in England would remain, and it remained to be seen whether the Defendants would be prepared to disobey the order of the English Court, now that the consequences had been spelled out to them. Males J further noted that he found it hard to believe that the parties would have devoted such significant resources to this application if they thought that the appointment of receivers would make no difference. Indeed, in the short term, a receivership order should help ensure that value that would otherwise flow to Unitech in India as a result of a distribution of proceeds to Nectrus from a share sale further down the chain expected to happen in mid-October 2014.
  • If receivers were not appointed, there was a real prospect that the Defendants would disobey the freezing order if they thought they could do so undetected.
  • There was a positive need in this case for ancillary orders to ensure that an order for the appointment of receivers would be effective, as indeed demonstrated by the Defendants’ own submissions. The position might have been different if there was clear evidence that such orders would require the Defendants to act in ways which would expose them to criminal liability in India. However, even the Defendants’ evidence did not go so far as to suggest this. The receivers would be officers of the English Court and, in exercising the powers given to them, would need to take such advice as they considered appropriate concerning Indian law. It was inconceivable that the receivers would act contrary to advice that a step they proposed to take, or to require Unitech to take, would involve the commission of an offence under Indian law, at any rate without first seeking directions from the English Court. Males J left it expressly open to the Defendants to apply to the English Court in the event of any issue as to whether any proposed step involved the commission of a criminal or regulatory offence under any relevant system of law.
  • Whether payment of the award would infringe Indian exchange control regulations, or whether any necessary permission would be given, was irrelevant on the present application. The order for appointment of receivers would not involve any such infringement, and provided a mechanism for such issues to be addressed by the receivers.


The English Court has confirmed once more with this case its commitment to promoting the ready enforcement of arbitration awards and its willingness to develop its jurisdiction incrementally if necessary, “unconstrained by rigid expressions of principle and responsive to the demands of justice in the contemporary context“. The English Court’s ability to grant such orders should provide further comfort to companies seeking to enforce English awards against assets held by uncooperative defendants through complex, multi-jurisdictional company structures.

For further information, please contact Craig Tevendale, Partner, Naomi Lisney, Associate, Hannah Ambrose, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

Craig Tevendale
Craig Tevendale
+44 20 7466 2445
Hannah Ambrose
Hannah Ambrose
Professional Support Lawyer
+44 20 7466 7585
Naomi Lisney
Naomi Lisney
+44 20 7466 2749