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Stakeholder Proceedings: Whose Rock Crystal Jar is it anyway?

  • United Kingdom
  • Commercial litigation


Imagine being in the possession of a priceless artefact of important historical significance which does not belong to you.  You are responsible for ensuring its security on a day-to-day basis at your cost yet cannot do anything about it due to warring factions who both claim to have ownership.  It may read like the script of a Hollywood B-Movie but it was the unfortunate reality recently for Sotheby’s Auctioneers after it took possession of an extremely rare and valuable Rock Crystal Jar to sell.

These situations are commonplace, particularly for auction houses, finance companies, banks, and police forces, but they can crop up in unlikely places:  the owners of a car park on which a vehicle has been abandoned; or executives of an estate to which the will is contested for example.  Although the judgment itself in Jeddi v Sotheby’s & Ors [2018] EWHC 1491 may be unremarkable in that the case applies existing and well-established authorities, the facts are interesting and it demonstrates to the wider world how a little known procedure in English law can help provide much needed relief in similar situations.  Stakeholder proceedings, formerly known as “interpleader proceedings”, allow the court to determine competing ownership claims in order to extricate an ‘innocent’ third party who holds an asset.  In this short article Adam Fisher, Hannah Nichols and Victoria Callicott examine what are stakeholder proceedings, and how are they useful.

The background to the dispute

The case in question concerns a dispute between a Mr Jeddi and a Mr Pishvaie regarding a rock crystal jar (the “Jar”). Mr Jeddi lives and works in Iran and is a collector of fine art and cultural objects. Mr Pishvaie is the son of a prominent Iranian politician who, before the revolution, had held such senior positions as the Prosecutor General of Tehran and the Vice Minister of Justice and a Supreme Court Judge. Mr Pishvaie is also a collector of antiques including ancient coins and other antique objects of the Persian Empire. Mr Jeddi claimed to be the sole owner of the Jar and thus entitled to its immediate possession. Mr Pishvaie claimed to be a 25% co-owner of the Jar with Mr Jeddi.

The Jar was deposited with Sotheby’s for sale on 31 January 2012 by Mr Pishvaie. The deposit receipt stated that the Jar had a provisional estimated value of £1.5m. Once deposited, Sotheby’s commissioned research into the Jar which identified that the Jar may have belonged to a rare group of surviving rock crystals from the Abbasid dynasty. The Jar was described as “the missing link between the two traditions of cut glass and carved rock crystal”. The estimated value of the Jar later increased to around £6m.

Sotheby’s marketed the Jar without success for a period of around 15 months. After this point, Sotheby’s received correspondence from Mr Jeddi stating that he was the owner of the Jar and that Mr Pishvaie had been acting solely as his agent when he had deposited it with Sotheby’s. Mr Jeddi explained that he had lost confidence in Mr Pishvaie and that he did not want the Jar to be sold on his behalf. In the letter, Mr Jeddi said that the fact that Mr Pishvaie was the agent could be demonstrated by an agreement called “the Dubai Agreement”. The terms of the Dubai Agreement were that: (i) the Jar had been consigned by Mr Jeddi to Mr Pishvaie for sale at one of two London auction houses (one of which was Sotheby’s); and (ii) the proceeds of sale would be shared on a 75% and 25% basis (with 25% to Mr Pishvaie). 

Following various correspondence with Sotheby’s in which both parties claimed to have rights over the Jar, Mr Jeddi issued delivery up proceedings against Sotheby’s. In response, Sotheby’s applied for interpleader relief and joined Mr Pishvaie as a Second Defendant to the action. The interpleader issue was tried as a preliminary issue and Mr Jeddi’s claim for delivery up was stayed until the parties’ respective rights and interests in the Jar had been determined.

The oral testimonies given in this case by Mr Jeddi and Mr Pishvaie were noted by the Court as being “irreconcilable” and each party fiercely disputed the other side’s statement of events.  The Court in such circumstances had to place more reliance on the documentary evidence produced by the parties but even the legitimacy of such documentary evidence was contested by a series of telecommunications experts, handwriting experts and paper historians.

Ultimately, the Court found more problems with Mr Pishvaie’s testimony than it did with Mr Jeddi’s and felt that at certain points Mr Pishvaie had intentionally deceived Sotheby’s and had been reckless or untruthful in a sworn affidavit. These factors, and a number more (including what the Court thought was an unconvincing tale regarding a Sasanian Jar and a finding that Mr Pishvaie had forged a critical document to support his case), led the Court to find Mr Pishvaie to be an unreliable witness who was prepared to assert matters which he knew not to be true or to which he had no basis for believing to be true. Perhaps unsurprisingly, the Court found on the balance of probabilities that Mr Jeddi was entitled to possession of the Jar and that Mr Jeddi had simply granted bailment of the Jar to Mr Pishvaie to enable him to sell it.  

So what are stakeholder proceedings and why are they useful?

Stakeholder proceedings are issued under Part 86 of the Civil Procedure Rules by the party which holds an asset subject to competing ownership claims. The proceedings effectively force the two (or more) parties asserting ownership to litigate their dispute before the Court. Following a hearing of evidence, the Court will give directions for the retention, sale or disposal of the subject matter of the application and for the payment of any proceeds.

This allows the party that is “stuck in the middle” to deal with the asset in question as the Court sees fit. Without a Court Order, if that party attempts to pass on possession of the asset to one of the parties (for example, because it believes their version of events over the other party’s account), it could find itself liable to a claim in conversion for dealing with it in a manner inconsistent with the rights of the true owner.

The question then arises as to why one could not simply continue holding the asset until one of the parties backs down? This of course is an option but once a party comes into the possession of another’s asset, depending on how that occurs, that party may have certain bailment duties to ensure that it exercises reasonable care to look after that asset at its own cost.  In the case of high value, rare or irreplaceable artefacts the cost of this can be considerable.  Stakeholder proceedings can offer a fairly quick and pain free way of protecting yourself against liability for claims in conversion and for costs of storage as well as neatly enabling you to rid yourself of involvement in an unwanted dispute. Such proceedings should also provide for the recovery of reasonable storage costs so that you are not left out of pocket. Stakeholder proceedings are therefore a powerful tool to consider when it comes to protecting your position in circumstances of competing ownership claims for an asset in your possession.