UK: Which Gateway? English Court Of Appeal Considers The Scope And Interplay Of Gateways For Service Out Of The Jurisdiction

Last Updated: 30 August 2018
Article by Alistair Graham and James Whitaker

Introduction

The English Court of Appeal recently handed down a judgement, in the case of Eurasia Sports Limited v Aguad1 , which could expand the scope of the "jurisdictional gateways" for service of proceedings out of the jurisdiction. The case is of relevance to parties who find themselves having to pursue multiple foreign defendants, and can found jurisdiction on the basis of a contract or tort cause of action against some, but not all, of those defendants.

Background

For litigants wishing to pursue counterparties based outside of the United Kingdom, they will first need to establish either that the English courts have jurisdiction to hear the claim on the basis of the Brussels/ Lugano Regime, the Civil Jurisdiction and Judgments Act 1982 or the Hague Convention; or that there is some alternative way of serving the prospective defendant within the English jurisdiction, for example by serving that foreign principal's agent within the jurisdiction. Failing that, the claimant litigant will require the Court's permission to serve the defendant out of the jurisdiction (under CPR 6, Section IV), on the basis that (i) there is a serious issue to be tried; (ii) there is a "good arguable case" that each cause of action falls within one or more of the jurisdictional gateways set out in CPR Practice Direction 6B; and (iii) in all of the circumstances, the Court ought to exercise its discretion to permit service out of the jurisdiction, which it will only do if it is satisfied that England is the proper place to bring the claim2 .

The jurisdictional gateways enable the English courts to exercise jurisdiction over foreign defendants in circumstances where the subject matter of the dispute has a sufficient connection with England, such as where a remedy is sought against a person domiciled within the jurisdiction; where the claim relates wholly or principally to property within the jurisdiction; where the claim relates to a contract which, inter alia, is made in the jurisdiction, is governed by English law, or contains a term by which the parties submit to the jurisdiction of the English courts (the "contract gateway"); or in the context of claims in tort, where damage was sustained, or will be sustained, within the jurisdiction, or results from an act committed or likely to be committed within the jurisdiction (the "tort gateway").

In addition to the contract and tort gateways, the two gateways relevant for present purposes, which are "complementary in their operation", allow proceedings to be served out of the jurisdiction with the permission of the Court where:

  • First, there is a "real issue" between the claimant and a defendant who has been or will be served, "which it is reasonable for the Court to try", and the claimant wishes to serve the proceedings on another party "who is a necessary and proper party to that claim" (the "necessary and proper gateway"3 ); or
  • Secondly, a claim is made against a defendant on the basis of another of the gateways, and "a further claim is made against the same defendant which arises out of the same or closely connected facts" (the relatively new "ancillary claim gateway" 4 ).

The effect of the ancillary claim gateway is that, where a claimant has established jurisdiction for a cause of action against a defendant on the basis of, for example, the contract or tort gateways, the claimant will be able to introduce a second cause of action against that defendant provided that the facts relating to the second cause of action arise out of the same or closely connected facts.

The position is more complicated, however, where there are multiple defendants, and the claimant is only able to found jurisdiction for a cause of action against some, but not all, of those defendants, i.e. the claimant cannot bring all of the defendants within the contract or tort gateways. How does the claimant reach the defendant who is not a party to the contract or tort claim? This was the issue considered in Eurasia Sports, which Lord Justice Longmore said "may well be the first appellate case to have considered the new 4A gateway".

The Eurasia Sports Limited v Aguad case

Eurasia Sports, which operates a betting agency, alleged that a number of defendants, of which Mr Aguad was one, all resident in Peru at the time of the events in question, conspired to defraud it. The present case involved Mr Aguad's challenge before the Court of Appeal, as the sole appellant (despite being one of eleven defendants), of the jurisdiction of the English court to try the proceedings against him, following the first instance court's rejection of his jurisdictional challenge.

Mr Aguad, who owned a casino in Lima, became a client of Eurasia Sports and was granted certain amounts of unsecured credit with which to gamble. Within the space of less than a month in late 2014, the amount owing on his account had increased to in excess of US$2 million. Eurasia Sports' claim against Mr Aguad was based in part, therefore, on his indebtedness. In addition, Eurasia Sports alleged that Mr Aguad was involved in a conspiracy to defraud it by virtue of his close links with certain of the other defendants. Those other defendants had, it was said, procured Eurasia Sports to provide online gambling services to various parties by falsely representing that money had been or was about to be transferred by way of security, or alternatively that the gambling services had been secured by a cheque for US$10 million. The cheque was drawn on an account which, it subsequently transpired, had insufficient funds to honour it. In short, therefore, Eurasia Sports had, it said, "suffered loss and damage in the sum of US$12,642,982.90, being the total of the amounts due and owing to [it] on the accounts of the First to Eleventh Defendants", which amounts were unsecured.

At first instance, Mr Justice Edis held that Eurasia Sports' claims against Mr Aguad satisfied the three tests set out in CPR 6, Section IV, discussed above. With regard to the second of those tests regarding jurisdictional gateways, Edis J held that the conspiracy claim against Mr Aguad fell within the tort gateway on the basis that the damage was sustained in London; that the claim in debt against Mr Aguad was "so closely bound up with the action against him and others in conspiracy" that Mr Aguad was a "necessary or proper party" to that action; and that, in light of the admissibility of the tort claim, the indebtedness claim fell within the "ancillary claim" gateway. The key question on appeal, therefore, was whether the lower court had been correct in granting permission for a conspiracy claim to be served on a foreign defendant. Aguad contended that the tort gateway could not be invoked because damage had not been sustained within the English jurisdiction, and Edis J's finding in respect of the necessary and proper party gateway was also therefore wrong.

Mr Aguad's appeal was rejected, although the Court of Appeal overturned Edis J's decision insofar as it related to the tort gateway. Edis J had concluded that the place of the damage was England on the basis that the Eurasia Sports had allowed bets to be made in England, in the belief that the risk arising from the lack of security for the credit facility was less than in fact it was. The Court of Appeal's view, however, was that the credit line was "merely prefatory to the sustaining of damage and does not itself constitute damage for the purposes of the tort gateway"; it merely exposed Eurasia Sports to the risk of damage. Rather, the damage had in fact been felt in the place where the necessary funds to clear the debts was supposed to be received, which was in Malta. Edis J, the Court of Appeal said, " fell into error in holding that the conspiracy claim passed the tort gateway on the basis that the harm was felt in London". That did not determine the appeal in Mr Aguad's favour, however, because of Eurasia Sports' reliance on other gateways.

The Court of Appeal agreed with Edis J, however, that Mr Aguad was a necessary and proper party to the conspiracy claim, on the following basis. Eurasia Sports' claims against the other defendants in respect of their betting accounts properly satisfied the contract gateway, because those contracts had been made in England. The conspiracy claims arose out of the same or closely related facts as those indebtedness claims, thereby satisfying the ancillary claim gateway test. The English courts therefore had jurisdiction to hear the conspiracy claim against Mr Aguad on the basis that he was a necessary and proper party to that claim, thereby satisfying the necessary and proper party gateway test. In those circumstances, Mr Aguad's jurisdictional challenge was dismissed.

Footnote

1 [2018] EWCA Civ 1742

2 Per Lord Collins, in the Privy Council, in AK Investments v Kyrgiz Mobil [2011] UKPC 7

3Contained in CPR Practice Direction 6B, paragraph 3.1(3)

4 Contained in CPR Practice Direction 6B, paragraph 4A, added on the recommendation of the Lord Chancellor's Advisory Committee on Private International Law, and which came into effect from 1 October 2015.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2018. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions