UK: Court Of Appeal Gives Guidance On How To Apply Jurisdiction Test Laid Down By Supreme Court

Last Updated: 1 February 2019
Article by Herbert Smith Freehills

The Court of Appeal has considered how the test for establishing English jurisdiction should be applied where there is a dispute over the facts relevant to jurisdiction: Kaefer Aislamientos SA de CV v AMS Mexico SA de CV [2019] EWCA Civ 10.

Where a claimant needs permission to serve proceedings out of the jurisdiction, the claimant has to establish that a relevant jurisdiction gateway applies, eg on the basis that the defendant has committed a breach of contract within the jurisdiction. The same is true where the claimant asserts an entitlement to serve out of the jurisdiction without the court's permission under an article of the recast Brussels Regulation, eg on the basis of a jurisdiction clause in favour of the English courts.

The test has in the past been expressed as the need to establish a "good arguable case" as to the application of the relevant gateway/article. This test was intended to be straightforward, but has become, in the Court of Appeal's words, "befuddled by 'glosses', glosses upon glosses, 'explications' and 'reformulations'."

The Supreme Court, in two cases in 2018, sought to clarify the test. However, how it applies in practice has not been entirely clear. The Court of Appeal in the present case has sought to interpret each limb of the test. It has, in particular, given its view that the court must consider the relative merits of the parties' arguments, rather than merely requiring the claimant to surmount a set evidential threshold. There remains however plenty of scope for further debate on the Supreme Court's formulation and how it applies in any particular case.


The case concerned a claim for sums alleged to be due under a contract to carry out works to an oil rig.

The claimant sued four defendants, AMS Mexico, AMS, AT1 and Ezion, relying on an English exclusive jurisdiction clause in the works contract. The contract on its face was entered into by AMS Mexico and AMS but the claimants alleged that those companies had entered into it on behalf of AT1 and/or Ezion as undisclosed principals. If that was the case, the contract, including its jurisdiction clause, bound all of the defendants.

The judge at first instance held that the English court did not have jurisdiction over AT1 and Ezion. The claimant appealed to the Court of Appeal.


The court (Lord Justice Green giving the main judgment) took as its starting point two recent Supreme Court decisions which had considered the test for service out of the jurisdiction, Brownlie v Four Seasons Holdings Inc [2018] 1 WLR 192 and Goldman Sachs International v Novo Banco SA [2018] UKSC 34. It observed that there was some doubt over whether the comments in Brownlie were obiter, but that did not matter as the test set out in that case had been endorsed by a unanimous Supreme Court in Goldman Sachs.

In those decisions, Lord Sumption explained that the starting point was the judgment of Waller LJ in Canada Trust Co v Stolzenberg (No 2)  [1998] 1 WLR 547 who had construed the "good arguable case" test as reflecting that one side had a much better argument on the material available. Lord Sumption described this a "serviceable test, so long as it is correctly understood", in particular emphasising that it does not import the civil burden of proof on a balance of probabilities. Instead, Lord Sumption said, what the test means is:

(i)        The claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway;

(ii)        If there is an issue of fact about it or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but

(iii)        The nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.

The Court of Appeal observed that, while the test was clear, the Supreme Court had not explained how the test works in practice, nor what is meant by "plausible" and how it relates to "good arguable case". Neither had it explained how the various limbs interact with the relative test in Canada Trust v Stolzenberg. How the tests should be interpreted had therefore been a matter of full argument before the court.

The key conceptual dispute between the parties, the court observed, turned on the difference between an absolute test and a relative test. Under an absolute test, the claimant need only surmount a specified evidential threshold (eg arguability) which does not involve the court in assessing the relative merits of the competing arguments. In contrast, a relative test involves the court in looking to the merits in a relative sense to see whose arguments are stronger. Claimants will naturally prefer an absolute test whereas defendants will favour a relative test.

The Court of Appeal took the view that a relative test applies, analysing each limb of the test in turn:

Plausible evidential basis – limb (i)

The court considered that the reference to "a plausible evidential basis" was a reference to an evidential basis showing that the claimant has the better argument. The burden of proof is on the claimant. For the avoidance of doubt, the test is not the balance of probabilities. Nor does the claimant have to show it has "much" the better argument; that is not required in order to show a plausible case.

The court must be astute not to express any view on the ultimate merits of the case, even if there is a close overlap between the issues going to jurisdiction and the ultimate substantive merits.

Taking a view on the material available – limb (ii)

This limb is an instruction to the court to overcome evidential difficulties and arrive at a conclusion if it reliably can. It is an instruction to use judicial common sense and pragmatism, not least because the exercise is intended to be conducted with due despatch and without hearing oral evidence. Ways around evidential problems include deciding on an assumed basis, or focusing on documentary evidence alone where there is a dispute between witnesses.

Plausible (albeit contested) evidential basis – limb (iii)

This addresses what the court should do when it finds itself unable to form a decided conclusion on the evidence before it and is therefore unable to say who has the better argument.

To an extent this limb moves away from a relative test and in its place introduces a test combining good arguable case and plausibility of evidence. This is a flexible test not necessarily conditional upon relative merits. The court acknowledged however that there was room for debate as to what this implied for the standard of proof.

"Good arguable case"

Lord Justice Green noted that the term "good arguable case" was not used in Goldman Sachs save in respect of limb (iii). He thought however that, provided it was acknowledged that labels do not matter and form does not prevail over substance, it was acceptable to wrap up the three-limb test under the heading "good arguable case". Lord Justice Davis took the view that whatever the niceties of language used, the ultimate test was one of good arguable case and for that purpose a court could apply the yardstick of "having the better of the argument."

Article 25 recast Brussels Regulation

The court also had to consider the effect of article 25 of the recast Brussels Regulation, which applies to jurisdiction clauses regardless of the domicile of the parties. Case law of the CJEU establishes that the consensus of the parties has to be "clearly and precisely demonstrated". The manner of proof is however an issue for national laws in member states, subject to an overriding duty to ensure that those laws are consistent with the aims and objectives of the Regulation.

The Supreme Court decisions had not considered article 25 as it was not relevant on the facts of those cases. The court in this case considered that the "clear and precise" test had to be taken into account as a component of the domestic test. It supported the conclusion that the test in limbs (i) and (ii) is a relative one and, in so far as the court cannot resolve outstanding material disputes (limb (iii)), it gives an indication as to the sort of evidence that a court will seek.

Application to the facts

While being critical of some aspects of his judgment, the court took the view that the judge had in effect applied the test in limb (ii) and there was no error in his analysis of the evidence, save that the entire agreement clause in the works contract was not neutral (as the judge had ruled) but rather pointed against AT1 and Exion being undisclosed principals.

The English court did not therefore have jurisdiction against AT1 and Exion and the appeal was dismissed.

Disclosure in jurisdiction applications

Finally, it is worth mentioning that Lord Justice Davis was critical of claimants seeking extensive disclosure from defendants "in effect by way of fishing exercise" and "then coolly relying on non-disclosure as of itself supporting the claim of a plausible case". The judge, he commented, rightfully saw through that ploy.

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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