Reed Smith Client Alerts

Key takeaways

  • In English law, the ‘responsible persons liability principle’ holds directors or officers accountable to a company’s breach of court orders
  • Prior to repeal in 2020, English Civil Procedure Rule 81.4 expressly stated the existence of the responsible persons liability principle
  • The court’s jurisdiction to commit directors for a company’s breach of a court order is an inherent, substantive power

ADM International Sarl v. Grain House International SA (formerly Compagnie Agricole de Commercialisation et de Conditionnement des Cereales et de Legumineuses SA) and Elhachmi Boutgueray [2024] EWCA (Civ) 33


Between 2014 and 2016, Grain House International S.A. (GHI) and ADM International Sarl (ADM) entered into several contracts relating to the sale of agricultural commodities. Following disputes, GHI and ADM entered into a written instalment payment agreement, which provided for disputes to be resolved by the Grain and Feed Trade Association (GAFTA) arbitration. GHI made the first payment due to ADM under the payment plan, but thereafter failed to make any further payments under the payment plan and so, in December 2017, ADM commenced a GAFTA arbitration in which they were awarded US$3,423,711.14 plus interest and €152,058.07 plus interest, together with £7,865.00 in arbitration fees.

On 30 January 2019, Mr Justice Bryan made an order under section 66 of the Arbitration Act giving ADM permission to enforce the award as a judgment. Shortly thereafter, ADM obtained an asset disclosure order from Mr Justice Waksman on 22 March 2019, a worldwide freezing order from Mr Justice Teare on 5 June 2019, and a further disclosure order from Mrs Justice Cockerill on 2 July 2021.

GHI’s director, Mr Boutgueray, served several affidavits which purported to comply with the disclosure orders that had been made. However, ADM considered that the orders had not been complied with. Therefore, on 17 February 2022, ADM issued an application for contempt of court. The application was heard before Mrs Justice Cockerill, who granted the application and imposed a £75,000 fine on GHI and a 12-months custodial sentence on Mr Boutgueray.

GHI and Mr Boutgueray appealed Mrs Justice Cockerill’s judgment. The appeal was heard by Lord Justice Popplewell (who gave the leading judgment), Lord Justice Singh, and Lord Justice Snowden. In summary, the Court of Appeal upheld Mrs Justice Cockerill’s judgment in respect of four out of the five contempts found. The significant points arising out of the judgment are dealt with below.

The Court of Appeal’s decision

The responsible persons liability principle

Until 2020, it was well established that, where a company breached a court order, proceedings for contempt of court could be brought against any directors or officers of that company who were responsible for the company’s breach, irrespective of whether those directors or officers had breached the court order personally. The Court of Appeal referred to this as the ‘responsible persons liability principle’.

In 2020, amendments were made to the English Civil Procedure Rules (CPR) which cast doubt on whether the responsible persons liability principle continued to exist (specifically the repeal of CPR r. 81.4(3), which expressly stated the existence of the responsible persons liability principle). Following an extensive review of the authorities, the Court confirmed that the principle was unaffected by the repeal of CPR r. 81.4(3) because the principle was founded in the Court’s inherent jurisdiction to secure the effective administration of justice and was not the creation of procedural legislation.

Significance: This is a welcome clarification in this area of law. The responsible persons liability principle is an important tool in ensuring compliance with court orders – particularly during the enforcement of judgments. This is especially so where the judgment is against a company that is controlled by a small number of individuals who may otherwise seek to frustrate the enforcement process while hiding behind the separate legal personality of the company.