Key takeaways
Charging orders
May be granted to support enforcement of arbitral award.
Funds held in name of third party
Will need to demonstrate they are beneficially owned by the defendant.
Governing law of trust agreement
Likely to be situs of assets of trust.
Soprim Construction SARL v The Republic of Djibouti [2026] EWHC 1850 (Comm) (24 July 2026)
In a previous decision arising out of the claimant’s attempts to enforce LCIA arbitration awards, the Court had to decide who was a defendant for the purposes of security for costs: see our article at Court considers who is defendant for purposes of security for costs | Hill Dickinson.
In this latest decision, the Court has considered whether to make final an interim charging order over approximately US$ 41 million held in London bank accounts in the name of a third-party company.
The Court ultimately concluded that a trust agreement should be inferred, whereby the interim administrator of the third party had agreed to hold the funds in the relevant accounts on trust for the defendant.
The background facts
In the early 2000s, the Republic of Djibouti (Republic) entered into arrangements with entities within the DP World group to develop a modern container terminal (Terminal). In 2006, Doraleh Container Terminal SA (DCT) was incorporated as the vehicle for the construction and operation of the Terminal.
A concession agreement dated 30 October 2006 (2006 CA) granted DCT the exclusive right to operate the Terminal for a substantial period. The 2006 CA was governed by English law and was ratified by the Djiboutian Parliament.
In May 2007, both DCT's Articles of Association and a joint venture agreement (JVA) were entered into between DCT, DP World Djibouti FZCO (DPWT) and a Djiboutian port entity, PDSA. Under these arrangements, which were envisaged to operate for 30-50 years, PDSA held approximately two-thirds of the economic interest and DPW held approximately one-third.
Notwithstanding this shareholding position, DPW exercised significant management control over DCT pursuant to contractual arrangements because the international funders of the Terminal required that DPW, not the Republic, manage and control the Terminal.
The Terminal commenced operations in or around 2008 and was commercially successful. DCT, PDSA and DPW all declared very substantial dividends from 2009 onwards. The 2006 CA provided for revenues generated by the Terminal to be paid into offshore bank accounts, and this was given effect to in December 2007 when DCT's board ratified a mandate confirming that Standard Chartered Bank (SCB) would act as DCT's bankers in the UK. The mandate was governed by English law.
The SCB Accounts were held in DCT's name at SCB in London. There were six separate accounts, holding a total of about US$41.6 million.
Soprim Construction SARL (Soprim) was incorporated in 2004 in Djibouti. Its General Manager, Mr Boreh, was close to the President of the Republic and had handled the negotiations for the 2006 CA on behalf of the Republic. However, Mr Boreh and Soprim subsequently alleged that they had been subjected to persecution by the Republic after Mr Boreh fell out with the President.
In LCIA arbitration against the Republic, Soprim was awarded US$ 56 million for the value of its destroyed business, plus interest of about US$ 28 million in interest and over £4 million in costs. The Republic neither challenged the awards nor paid the amounts ordered.
In June 2017, Soprim obtained a worldwide freezing order (WFO) from the English Court for the purpose of supporting the ongoing arbitration. The WFO extended to the SCB Accounts on the basis that they contained funds from the Terminal's operations representing unpaid dividends and that a dividend was due to PDSA which, if paid, would ultimately be received by the Republic.
In addition to Soprim’s dispute with the Republic, there were separate disputes between:
the Republic and DPW
the Republic and DCT
PDSA and DPW.
In essence, these disputes related to the Republic’s attempts to annul the 2006 CA and expropriate the Terminal and to PDSA’s attempt to annul the JVA.
All these disputes resulted in LCIA arbitration awards in favour of DPW and DCT, who sought to enforce the awards in various jurisdictions. DPW also obtained an interim injunction from the English Court to maintain the JVA and preserve DCT’s assets, pursuant to s.44 of the Arbitration Act 1996.
In September 2018, the Republic succeeded in having an interim administrator over DCT appointed by the Djibouti Court. The administrator was Ms Tadoral, who had close links with the Government and with Djibouti’s first lady.
In December 2023, DCT was placed into liquidation upon the application of Ms Tadoral and a liquidator (Mr Youssouf) was appointed. DPW and DCT were unsuccessful in challenging these actions.
In March 2019, Soprim obtained an order permitting it to enforce the arbitration awards in its favour though they were judgments, pursuant to s.66(1) of the Arbitration Act 1996. In February 2025, Soprim obtained an interim charging order over the SCB Accounts.
In May 2025, Mr Youssouf expressed an intention to repatriate the funds in the SCB Accounts because they were DCT’s assets and were under threat from Soprim. He stated that he had not previously been aware of the existence of the Accounts before April 2025.
The issues
Soprim acknowledged that it did not have any judgment or award against DCT directly. However, it argued that that the monies in the SCB Accounts were beneficially owned by the Republic, such that they were amenable to enforcement. DPW and DCT maintained that the funds belonged to DCT and were not available to satisfy liabilities of the Republic.
Soprim contended that DCT (acting through its administrator or liquidator) had entered into an arrangement (Agreement) whereby it had agreed to hold the funds in the SCB Accounts on trust for the Republic. Such an Agreement was to be inferred from the Republic’s control over DCT and the conduct of those acting on its behalf. DWP and DCT denied there was any such Agreement.
The Commercial Court decision
Governing law of the Alleged Trust Agreement
The first question was the governing law of the alleged Agreement.
The Court decided this was English law pursuant to Article 7(b) of the Hague Convention on the Law Applicable to Trusts and their Recognition (Hague Convention), as incorporated into English law.
In the absence of an express choice of law, Article 7 provides that a trust shall be governed by the law with which it is most closely connected. In determining this issue, consideration is given to a number of factors including, at Article 7(b), the situs of the assets of the trust.
On the authorities, the situs factor should be given greater priority than the other Article 7 factors, such as the residence of the trustee (Article 7(c)) or the objects of the trust and where they are to be fulfilled (Article 7(d)).
In this case, the assets were within the jurisdiction given that the SCB Accounts were in London. Therefore, English law governed the alleged Agreement.
Was an Agreement concluded?
On the evidence, the Court concluded that there was in fact an Agreement of the nature contended by Soprim.
Did that Agreement constitute a trust under English law though?
Soprim argued that DCT held the SCB Accounts on a bare trust for the Republic. A bare trust is when the trustee holds the assets on trust for the beneficiary absolutely but also agrees to do either whatever the settlor / principal asks, or at least whatever is asked within a certain range of possibilities.
On the evidence, the Court concluded that the case for a private law trust had been made out in relation to Ms Tadoral. It did not, therefore, need to consider the position with regard to Mr Youssouf.
The Court also dismissed the argument that the appointment of Ms Tadoral was in breach of the s.44 injunction, and it should not, therefore, be recognised.
The Court further rejected the argument that Ms Tadoral’s appointment had been procured in breach of arbitration agreements in the JVA.
Additionally, the Court dismissed the contention that Ms Tadoral’s appointment offended natural justice because this was an impartial appointment and evidence of undue influence on the part of the Republic. The evidence did not meet the high threshold for making this argument successfully.
The Court concluded by deciding that it should exercise its discretion to make a final charging order in Soprim’s favour.
The Court noted that while DPW and DCT had objected to Soprim’s application, they had not taken equivalent steps and applied for their own charging order notwithstanding that DPW had suffered major losses due to the Republic’s purported termination of the 2006 CA.
As the Court put it, Soprim was ‘not only the first past the post but, to date, the only party even to have begun the race.’
Comment
The facts of this case are very specific, involving allegations of improper and illegal governmental actions.
It is useful, however, for clarifying how charging orders can be used in support of the enforcement of arbitral awards.
It also highlights the importance of establishing that any assets subject to such a charging order are legally and/or beneficially owned by the debtor.
For more information on our International Arbitration team here or contact us to discuss how we can help.
