BL-2025-001269 and BL-2024-001337 - [2025] EWHC 2706 (Ch)

I have come to the clear decision that I should refuse the injunction and grant relief to De Beers which ensures that if they enter into the settlement agreement then they do not risk a determination of contempt against them, though perhaps not in the terms in which they currently seek that relief.

I have already indicated that this is not a case in which there was detailed reliance on the appropriateness of damages for either side. It was treated as a case in which I was being invited to decide in principle and on the facts, in circumstances of some urgency, whether or not a settlement should be permitted which would forestall a trial which is apparently about to start in South Carolina. I would agree that in theory damages might be an adequate remedy, technically speaking, for both sides, but computation of those damages would be extremely difficult. But no-one really argued about that.

I will therefore go along with the parties in their approach (which I consider to be correct) and consider the merits of the dispute as it stands. In these highly unusual circumstances I have to bite the bullet of the merits of the dispute so far as I can do so.

I consider it would be too strong a thing to refuse this party the right to settle a case in a foreign jurisdiction which it no longer wishes to fight. What would the alternative be? If I granted the injunction the settlement would not happen, and indeed no settlement could happen. On analysis this case was not just about the terms of this settlement; it is about any settlement (or at least any settlement which provided benefits to the receiver). Accordingly, the third party proceedings in South Carolina would presumably proceed to trial. At the moment the trial is of liability only, with remedies to come later if liability is found. But then De Beers would be faced with a further trial of remedies and quantum. If CIHL is right De Beers could not settle that either, so they would be forced to fight that. That would or could result in a money judgment which, on this hypothesis, would be likely to be substantial.

The critical question then is whether they would be entitled to satisfy a judgment notwithstanding the injunction that I granted. Logically speaking, on Mr Dale’s case they would not - settling a judgment would contravene the injunction and amount to the wrongs that he averred and he would be entitled to an injunction to restrain it. Mr Dale, after some equivocation, and with obvious reluctance, seemed to accept that that was the case, but he also sought to say that that would be a different situation from the present. I do not see that it would. My present view is that this court would not intervene to prevent De Beers satisfying a judgment of the foreign court even though this court (and De Beers) would take the view that that judgment should never have been available or obtained on the reasoning in my first judgment. The fact is that the foreign court (on this hypothesis) has given a judgment. If De Beers chose to pay for reasons of financial and reputational risk (the reputational risks probably being stronger once a judgment was obtained), and even though it maintained that it was paying a man without authority and on the basis of what it says is flawed procedure (supported by the English court) then it is very difficult to see why it should not be entitled to do so. It would, of itself, not offend against English law and jurisdictional principles for De Beers to fulfil its commercial needs in that way. International private law remains intact. All that has happened is that De Beers have decided that they do not wish to have the benefit of what is established.

If that is right then in my view the same applies to a settlement. If De Beers would be entitled to satisfy a judgment if one were obtained, then in my view a settlement into which it would seem to have been bludgeoned is something they would be entitled to do even if the English law position is that the man with the bludgeon should not have had it in the first place. They would be as entitled to mitigate the risks of a judgment, (which on this hypothesis they would have to pay) as to satisfy a judgment itself.

I do not think that the EDF Man case assists Mr Joseph much in this respect, though it is true that Mann LJ did observe:

“I do not see how it can be unconscionable for a person to defend himself by any means permissible under local law” (p440)

and it could be said that settling a case is a means of defending against a local claim. Of more assistance to him is the Mamidoil case. In that case there was a local interlocutory order made in The Former Yugoslav Republic of Macedonia which prevented Okta from satisfying a judgment. The Court ruled, as a matter of discretion (also considering comity) that it would not restrain Okta from relying on that order in the local court. Aikens J said:

“Furthermore if an injunction were granted it might place Okta and its officers in an impossible position if Jetoil attempted to enforce this judgment in the FYROM Courts. Those Courts have granted an interlocutory injunction preventing Okta from paying damages to Jetoil. To disobey that in the FYROM may well be the equivalent of a contempt and could expose officers of Okta to criminal sanctions.”

That is not the same situation with which De Beers are faced in this case because this case does not involve a possible contempt in South Carolina but it does demonstrate that the court will not lightly put a party between the rock and the hard place that Mr Joseph referred to.

In my view an English court would not normally require a party to defend foreign litigation (as opposed to preventing prosecuting it), and short of a contractual obligation it is difficult if not impossible to see how that would ever be justified. But it would be the effect of my granting the injunction sought by CIHL. If I granted the injunction De Beers would be forced to defend an action that it no longer wishes to defend. To bring that about would not seem to me to be a principled decision. If that is right then it must be open to De Beers to be able to settle the action if it wishes to do so.

I acknowledge that there is some degree of detriment to CIHL in “allowing” the settlement. It is possible that it will encourage copycat litigation by claimants and others who might wish to consider adopting Mr Protopapas’s techniques. I also acknowledge that it is likely that the settlement funds could be further used to pursue CIHL. It is not known for certain whether the funds could be used for that purpose, because the terms of the QSF have not been disclosed, but that was expressed as a fear in CIHL’s evidence and it has not been met by a denial, and the history of the matter indicates that it is eminently plausible. However, if copycats are encouraged then that is because US jurisdictions, as a matter of local law, permit it. Unless and until a court rules against Mr Protopapas’s techniques CIHL (and others, I suppose) remain exposed in any event. If Mr Protopapas manages to get funds made available to him by settling cases then that is because the local law and the realpolitik of litigation enables it. It would not be right for an English court to try to exercise some sort of extra-territorial control by denying a defendant the right to settle cases brought which an English court may regard as unmeritorious, even if likely to cause trouble, but which the defendant no longer wishes to run.

I am less convinced by CIHL’s other claims to prejudice. Part of the purpose of my granting declarations in my first judgment was to be able to demonstrate to people such as auditors, bankers, lenders and suppliers that as a matter of English law Mr Protopapas’s claims had no validity. That still stands. Although that cadre of people would have to speak for themselves, I am not sure why their views, whatever they may be, would be changed by the fact that another set of parties no longer has the stomach for a fight. It is not obvious to me how any risk to CIHL is increased, at least on the evidence I have seen. The same should apply to employees and would-be employees. However, even if I have underestimated the significance of this factor, it does not have much weight in a decision as to whether De Beers should be restrained from settling.

Nor do I consider it likely that allowing the settlement will somehow give credence in the South Carolina courts to the techniques deployed by Mr Protopapas. The South Carolina courts will make their own decisions as to their own procedures and laws, without any assistance from me, and in any event no-one reading this judgment could think that I am in any way resiling from the English position on Mr Protopapas’s status.

Mr Joseph made much of an averment that people in the position of his client cannot have been intended to be caught by the injunction restraining the receiver. He is right about that to a degree. The position of third parties was not the subject of consideration, and in the unusual circumstances of this case they may require special consideration. These applications provide that special consideration.

For his part Mr Dale emphasised that not granting his injunction, and releasing the present injunction to allow the settlement, would amount to the English court giving up in its attempts to control what it has found to be the illegitimate activities (under English law) of Mr Protopapas, and that to do so would somehow nullify the effect of the relief granted. I do not accept that submission. To allow the settlement would in no way go counter to the declarations which I have granted. They would continue to have their full force and effect. What would be permitted is a settlement by a third party who wishes to pay money to a person who has no entitlement (under English law) to demand or receive it. If De Beers wish to do that that is a matter for them. It does not make any difference to the force and effect of the determinations that I have made as to the status of that person. Nor is the court giving up in some sort of tussle between the two jurisdictions. It is merely acknowledging that if a commercial entity wishes to take a commercial view of its own position, which contrasts with the legal position, all in its own interests, because it is caught in a dilemma, then it should be allowed to do so. Mr Joseph’s skeleton argument made it plain that his clients “did not disagree” with the proposition that the settlement agreement would not be binding on CIHL and would be of no effect under private international law. He is right about that. The English court is not giving up any sort of principled position in not standing in the way of De Beers.