UK: How To Avoid….Foreign Defendants Challenging Jurisdiction Or Service Of A Claim In England

Last Updated: 20 November 2012
Article by Liane Bylett

When the defendant is situated outside of the English jurisdiction, you must follow specific rules to ensure that your claim is brought in the right court and properly served. Liane Bylett from our Commercial Disputes Team outlines the pitfalls for the unwary.

So you have your claim ready, but your opponent is overseas. At this critical stage, there are some key points to consider. These are:

  1. Is England the right place to bring the claim?
  2. Do you really need to serve out of the jurisdiction?
  3. If so, do you need permission to serve out of the jurisdiction?
  4. How should you serve the claim? 

The rules on jurisdiction and serving a claim form can be complex, particularly when the defendant is not within the English jurisdiction. It is important to get it right, because failure to properly to serve a claim can be a costly mistake if the defendant challenges jurisdiction and/or service.

1 – Is England the right place to bring the claim?

You should consider whether the courts of England are the proper place for the dispute to be heard. Jurisdiction is a fact specific issue and legal advice should be sought in all instances. There are in essence two sets of complex rules that govern jurisdiction; the European regime under the Brussels Convention / Brussels Regulation and the common law rules.

In cases between parties based in EU countries, jurisdiction under the Brussels Convention / Regulation will usually found on the basis of the domicile of the defendant individual or company of the member state. This essentially means that a defendant living in an EU country must be sued in the courts of that country. However exceptions may be made where special jurisdiction exists. This could be based upon, for example, an agreement between the parties as to which jurisdiction shall apply, or the place of performance of the contract or the place where a tort was committed.

The common law rules applying to non-EU defendants are complex. Under these rules, the courts will take into account various factors of personal and subject matter jurisdiction. This could include consideration of the domicile of the parties, the place of performance of a contract or the place where a tort was committed, any agreement between the parties in respect jurisdiction, whether any related proceedings are ongoing in another country and/or whether there is a more convenient forum elsewhere.

2 - Do you really need to serve out of the jurisdiction?

Some thought should be given to whether it is necessary to serve the defendant out of the jurisdiction. For example, it may be possible to effect service on the office/agent of a foreign company based here, or by a contractually agreed method of service here, or to serve the defendant if they are passing through England or temporarily present here.

Furthermore, in certain circumstances, parties may apply to the Court for an order permitting service out of the jurisdiction by alternative means, (such as email, Twitter and Facebook) where it appears that there is a good reason to do so. This was only recently confirmed by the Court of Appeal in the case of JSC BTA Bank v Ablyazov and others [2011]. The Court of Appeal followed its previous decision in Bayat Telephone Systems International Inc and others v Lord Michael Cecil and others [2011] and confirmed that alternative service out of the jurisdiction may be granted where there is "good reason", although the desire to avoid delay is not of itself a good enough reason.

3 – Do you need permission to serve out of the jurisdiction?

Permission is not generally needed for service on a defendant in Scotland or Northern Ireland providing certain conditions are satisfied, including the court having jurisdiction and the defendant being domiciled within the UK.

In addition, permission is not usually needed to serve a defendant outside of England where the Court has the power to hear the claim under the Brussels or Lugano Convention or the Brussels Regulation. In general terms, the Brussels Regulation applies to all EU member states and the Brussels Convention applies to certain EU-dependent territories. The Lugano Convention 1988 applies to Iceland and the Lugano Convention 2007 applies to Switzerland and Norway.

The Court's permission is generally required for service out of the jurisdiction in circumstances when the defendant is not domiciled in the UK or an EU country. This means that you must make an application to the Court for permission before effecting service. The requirements for a successful application for permission to serve out of the jurisdiction are:

  • The claim must fall within one of the "jurisdictional gateways". There are a number of different gateways and specific fact-based advice should be sought in all instances. However, by way of example, one of the gateways relating to claims in contract states that permission will be granted to serve out of the jurisdiction providing either (a) the contract was made within the jurisdiction; or  (b) the contract was made by or through an agent in the jurisdiction; or (c) the contract is governed by English law; or (d) the contract has a jurisdiction clause in favour of the English courts; or (e) the claim is for a breach of contract that occurred within the jurisdiction.
  • The claimant must believe that the claim has reasonable prospects of success. This means that the claimant must have a "good arguable case". The court will usually apply the Canada Trust test which requires the claimant to show that it has "much the better, or at any rate the better, of the argument". In the recent case of Williams v Central Bank of Nigeria [2012] the court explained this further by saying that the Claimant must show that "not merely that on balance they have the better of the argument, but that they clearly do so".
  • There must be a real issue for between the claimant and the defendant which is reasonable for the court to decide. 
  • England must be the proper place to bring the claim. This means that England must be the place where the case should most suitably be tried for the interests of all of the parties and for the ends of justice. It is necessary to consider what is the "natural forum" for the claim, which means the place with which the claim has the most real and substantial connection. Factors to consider in this regard include convenience, expense, and where the parties reside and/or carry on business. 

4 – How should you serve the claim?

OBER 2011

Once you have obtained the court's permission (if necessary), you should then look at which method you should use to properly serve a foreign defendant.

If the defendant lives in Scotland or Northern Ireland, you should follow the same rules as if you were serving a party within England and Wales (for example, personal service, first class post or, if the defendant has agreed, by electronic means).

If serving a party outside of the UK, service is usually effected by a method set out in the EU Service Regulation (in the case of a defendant in an EU member state) or any method provided by a Civil Procedure Convention or Treaty, such as the Hague Convention. In addition, service may be effected by any other method permitted by the law of the country in which the claim is to be served (for example, an authorised officer of the local court). It is important to note if a lawyer in an EEA state has confirmed instructions to accept service of the claim on behalf of the defendant, then you should effect service on the lawyer, not on the defendant directly.

The EU Service Regulation applies to EU member states (excluding Denmark) and covers civil proceedings and all forms of insolvency proceedings (as decided in the recent case of Hornan v Baillie and others [2012] concerning a claim for transactions defrauding creditors under section 423 of the Insolvency Act 1986). The Regulation provides the following four methods of service:

(1)   Transmission method –The procedure for this method is set out at Articles 4-11 of the Regulation. Each member state must designate an official agency for the transmission and receipt of judicial documents, which should be served by the official agency within one month of receipt;

(2)   Post;

(3)   Direct service;

(4)   Diplomatic or consular agents.

The Hague Convention applies to a large number of contracting states (although the EU Service Regulation has superseded the Hague Convention for EU countries). The primary method of service under the Hague Convention is through a central authority which must be established in each contracting state to take responsibility for service of documents (similar to the transmission method under the EU Service Regulation). In England, the central authority is the Foreign Process Section of the Royal Courts of Justice. Depending on the country you are serving in, this method of service can be a very lengthy process.

Summary

As you can see, there are a number of additional factors that should be considered when the defendant is overseas. The proper process should be followed to ensure that jurisdiction is founded, service is effective and the defendant cannot try to challenge the proceedings on either basis. If you are in any doubt, it is usually best to seek legal advice on these issues.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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