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Neutral Citation Number: [2011] EWHC 1024 (Comm) Case No: 2004 FOLIO 124 AND 831 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice Strand, London, WC2A 2LL Date: 05/05/2011 Before : MR JUSTICE CHRISTOPHER CLARKE - - - - - - - - - - - - - - - - - - - - - Between : Munib Masri Applicant/Judgment Creditor - and - Consolidated Contractors International Company SAL First and Second Consolidated Contractors (Oil and Gas) Company SAL Respondents/Judgment Debtors Wael S Khoury Third Respondent - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Gavin Kealey QC, Stephen Philips QC, MP and Colin West (instructed by Simmons & Simmons LLP) for the Judgment Creditor Alan Boyle QC, James Lewis QC, Dan McCourt Fritz and Ben Brandon (instructed by SC Andrew LLP) for the Judgment Debtors Ian Mill QC, Andrew Hunter and Tom Cleaver (instructed by Jones Day) for the 3rd Respondent Hearing dates: 31st January, 1st, 2nd, 3rd, 7th, 8th, 9th, 10th, 14th, 15th, 16th, 17th and 18th February 2011 - - - - - - - - - - - - - - - - - - - - - Approved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. ............................. MR JUSTICE CHRISTOPHER CLARKE MR JUSTICE CHRISTOPHER CLARKE Masri v CCC Approved Judgment MR JUSTICE CHRISTOPHER CLARKE : 1. Mr Munib Masri (“Mr Masri”/“the judgment creditor”) applies for a declaration that the first and second respondents (“the judgment debtors”) are in contempt of this court by reason of several breaches of orders made following a judgment on liability given by Gloster J on 28th July 2006 (“the liability judgment”) and for an order that they be fined on that account. 2. He also seeks the committal of the third respondent, Mr Wael S Khoury, on the ground that he is a de facto or shadow director or officer of the judgment debtors and has participated in the breaches relied on and/or wilfully failed to take reasonable steps to ensure that the orders were complied with. In January it became clear that the time estimate previously given for the hearing was woefully inadequate and that it would not be possible to deal with the case against all the respondents within such (extended) time as the Court was able to make available. I directed that the case against Mr Wael Khoury should only be dealt with after I had delivered judgment in respect of the judgment debtors. 3. This is a further round in the long drawn out feud between Mr Masri, on the one hand, and the Khoury and Sabbagh families on the other. The allegations of contempt and the defences thereto cannot be understood without reference to the complicated history of that feud and of the litigation that has followed in England, the Lebanon and elsewhere1. The cast Individuals 4. The Sabbagh family was headed by Mr Hasib Sabbagh, prior to his recent death. He has two sons – Samir Sabbagh and Suheil Sabbagh. 5. The Khoury family has at its head Mr Said Tawfic Khoury. He has three sons – Tawfic Khoury, Samer Khoury and Wael Khoury. He has two daughters one of whom is Salwa Khoury. She is married to Samir Naef Khoury. Khoury family members reside in both London and Athens. [Note that Wael Khoury lives in London]. Companies 6. The Khoury and Sabbagh families are the owners of the Consolidated Contractors Companies Group. This Group is often known by the initials “CCC”. At the head of the Group is Consolidated Contractors Group SAL (Holding Company) (“CC Holding”). It is beneficially owned as to 60% by the Khoury family (in part through Consolidated Investment Company, a Khoury family company) and as to 40% by the Sabbagh family. It is incorporated in Lebanon. CC Holding owns almost all the shares in two Lebanese offshore companies – Consolidated Contractors International Company SAL (“CCIC”) and Consolidated Contractors (Oil and Gas) Company SAL (“CCOG”). These are Lebanese offshore companies. Such companies pay practically 1 I am conscious that this is an exercise carried out by other judges in earlier proceedings. I take the view that it is necessary, or at any rate desirable, to set out the history in order to make this judgment self-contained and inclusive of matters that are particularly pertinent to this application. MR JUSTICE CHRISTOPHER CLARKE Masri v CCC Approved Judgment no tax in Lebanon but may not carry on business there2. They may, however, manage from Lebanon businesses carried on elsewhere. According to the evidence of Mr Nassib Chedid, the judgment debtors‟ Lebanese lawyer, CCIC and CCOG have now about 100 employees in Beirut distributed over several offices of the Group and have bank accounts there. They have, however, several bank accounts elsewhere. 7. Two shares out of 500,000 in CCIC are directly held by Mr Samir Sabbagh and 2 shares out of 100,000 shares in CCOG are directly held by Mrs Salwa Khoury. These were allocated to, or acquired by, them in order that they might act as directors. Lebanese law requires a director to be a shareholder but one share will suffice. A number of other individuals who have in the past acted as registered directors of the companies, also hold such nominal shareholdings. 8. CCIC was the main group company. It has been a very successful company which has carried out a large number of construction projects mainly for government entities in the Middle East, where it enjoyed a great deal of success and a long standing reputation. CCOG operates in the oil and gas field and held the oil and gas interests of the Group. 9. In 2004, CCIC had its principal office in Athens. It was described by Mr Said Khoury in his 1st witness statement of 18 November 2004 as “based” there. As late as 21 March 2010 CCIC described itself in Swiss proceedings as having its “siege” i.e. seat in Athens. In March 2008, CCIC‟s central accounting system was held on computer in its principal place of business in Athens: see para 5 of the third witness statement of Suheil Nasser, who was then the Chairman of the judgment debtors. The number of employees in Greece reduced from about 600 to about 75 by February 2010. The affairs of the Group were also managed from London. 10. In late 2004, CCOG had no physical office or physical presence in Lebanon; its financial accounting was carried out by CCIC personnel at CCIC‟s offices in Athens where all its financial records were; and it had no employees of its own: para 5 - 9 of the 1st witness statement of Walid Noureddin. According to the same statement the majority of the shareholders of CC Holding were based in Athens, being Said Khoury, Hasib Sabbagh, Suhail Sabbagh, Samir Sabbagh, Tawfic Khoury, and Samer Khoury. Wael Khoury was based in London. The Masila oil field. 11. Block 14, otherwise known as the Masila Oil Field, in the Yemen has turned out to be a very profitable oil field. CCIC obtained a 10% interest in that field by virtue of: i) an Agreement for Petroleum Exploration and Production between the Yemeni Minister of Energy and Materials, Canadian OXY Offshore International Ltd (“Canadian Oxy”) and CCIC dated 15 September 1986; and 2 Article 2 of Law No 46 of 24 June 1983 governing offshore companies provides that they “shall be forbidden to engage in industry, banking operations, insurance or holding or undertaking any commercial activity on the Lebanese territory” other than as mentioned in Article 1, which permits the “negotiation and signature of contracts and agreements in respect of operations and deals where the implementation shall be effected outside the Lebanese territory and relevant to merchandize and products situated abroad or in the customs free zone”. MR JUSTICE CHRISTOPHER CLARKE Masri v CCC Approved Judgment ii) the Masila Joint Operating Agreement between Canadian Oxy and CCIC of 27 April 1987. CCIC‟s interest was assigned to CCOG on 25 October 1992. For many years the Masila oil field was the only project which produced profitable revenues for CCOG. The 1992 Agreement 12. By a one page agreement dated 6 November 1992 (“the 1992 Agreement”), written on the notepaper of Consolidated Contractors International (UK) Ltd, an English company (“CCUK”), and signed by Mr Masri and Mr Said Tawfic Khoury, Mr Masri was granted a 10% share of CCC‟s interest in the Masila Concession in exchange for payment of 10% of the costs in respect of the concession. Mr Masri‟s proceedings The first action 13. Mr Masri brought two actions. The first was commenced on 18 February 2004 (“the first action”). The Defendants were CCUK and CC Holding. CCUK and CC Holding were served within the jurisdiction. In the first action Mr Masri claimed that CCUK was a party to the 1992 Agreement, being the principal, or, in the alternative, the agent of CC Holding. In para 6 of his Particulars of Claim, Mr Masri pleaded that at the time that the Concession was originally granted in 1985 he had not known that CCC‟s interest in the Concession was owned by CCIC. He also referred to the fact that the interest had subsequently been transferred to another CCC Group subsidiary, CCOG. At para 12, Mr Masri pleaded that Mr Khoury was signing the 1992 Agreement on behalf of CCUK and that this was consistent with the fact that the agreement was recorded on the letterhead of CCUK. On 28 July 2004, CCUK applied in the first action for reverse summary judgment on the basis that it was not a party to the 1992 Agreement and that the claim against it had no reasonable prospect of success.

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