PetroSaudi Oil Services (Venezuela) Limited v Clyde & Co LLP [2021] EWHC 444 (Ch), [2021] EWHC 600, [2021] EWHC 747 (Ch)

David Allen QC and Jason Robinson represented PetroSaudi in a claim requiring the payment of a fund of $325m into Court pursuant to CPR 64 and the Court’s inherent jurisdiction in respect of trustees.

The background to this case is that David Allen QC, Simon Kerr, Ben Parker and Jason Robinson successfully represented PetroSaudi in a long running UNCITRAL arbitration initiated by the Venezuelan state-owned company, PDVSA Servicios SA. PetroSaudi successfully defeated a claim of about $2bn and, in July 2020, was awarded over $379m plus 12% interest. The fund of over $325m held by Clyde & Co as escrow manager and trustee was the result of draw-downs from a rolling standby letter of credit issued in favour of PetroSaudi in turn for drilling services performed over the course of a 7 year drilling contract.

On 14 October 2020, the US District Court of the Central District of California issued a civil forfeiture “in rem” arrest warrant in respect of the $325m fund held by Clyde & Co on behalf of PetroSaudi, in consequence of which Clyde & Co stopped paying monthly maintenance to PetroSaudi from the fund. (The High Court had already found that Petrosaudi was the sole owner of the fund: see [2020] EWHC 2819 (Ch).)

After a trial in early February 2021, Mr Justice Miles handed down judgment on 26 February 2021 in which he found that Clyde & Co faced a real risk of liability abroad if it were to be ordered by the English Court to pay the $325m fund into Court, in consequence of the “in rem” arrest warrant issued by the US Court. PetroSaudi sought permission to appeal.

However, on 9 March 2021, the US Court recalled the arrest warrant as the US Department of Justice had no basis on which to apply for it. Therefore, on 23 March 2021, after a further application, Mr Justice Miles granted PetroSaudi’s claim for Clyde & Co to convert $325m to sterling and to transfer the sterling fund equating to about $325m into Court with facility for PetroSaudi to receive maintenance payments. Clyde & Co adopted a neutral position on the second application.