Pantheon International Advisors Ltd v Co-Diagnostics, Inc  EWHC 1984 (KB)
CPR 6.33(2B)(b) was introduced in April 2021 as part of the EU exit arrangements consequent upon Brexit. Unlike the perhaps more familiar provisions for service out under CPR r 6.36, which requires permission from the court, CPR 6.33(2B)(b) provides for service of a claim form on a defendant out of the jurisdiction without permission of the court where "for each claim made against the defendant to be served and included in the claim form a contract contains a term to the effect that the court shall have jurisdiction to determine that claim."
Wendy Parker acted for the successful claimant in Pantheon International Advisors Ltd v Co-Diagnostics.
The Claimant was an English-registered company which had entered into a written agreement with the Defendant Utah corporation in February 2016 pursuant to which the Claimant would assist the Defendant in raising capital in the UK markets. The Claimant's case was that services had been provided under the 2016 contract but not paid for, before the 2016 contract was superseded by a new agreement in 2018. Both contracts allegedly contained exclusive jurisdiction clauses in favour of the English courts and governing law clauses in favour of English law.
On 2 June 2021, the Claimant issued a Claim Form pursuant to the alleged 2018 contract, and subsequently filed a Notice at court for service out where permission is not required. The Claim Form and Amended Particulars of Claim, which included contract claims, allegations of unjust enrichment, and a claim in quantum merit for the services provided but not paid for, were then served on the Defendant out of the jurisdiction on 10 September 2021.
The Defendant filed an acknowledgement of service contesting the jurisdiction; and on 4 March 2022, issued the present application seeking a declaration that the English court has no jurisdiction to try the claims, and to set aside service of the Claim Form and Amended Particulars of Claim.
The Test for Service Out Where Permission is Not Required
The parties were in agreement as to the applicable legal principles. They accepted that cases decided in respect of the now-obsolete former Practice Direction 6B paragraph 3.1(6)(d) remained relevant; and that, to meet the gateway, the Claimant had to satisfy the 'good arguable case' test as restated in Brownlie v Four Seasons Holdings Inc  UKSC 80 and Goldman Sachs International v Novo Banco SA  UKSC 34, and on which the Court of Appeal provided more guidance in Kaefer Aislamientos v AMS Drilling Mexico  EWCA Civ 10.
Thus, at , Master Stevens set out the three-limb test, drawing upon paragraph 9 of Lord Sumption's opinion in the Brownlie case (in bold type); and referred to Green LJ's further guidance from paragraphs 73-80 of the Kaefer case:
- the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway. This is "a reference to an evidential basis showing that the claimant has the better argument ... For the avoidance of doubt the test under limb (i) is not balance of probabilities ...the test is context-specific and flexible..."
- 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. "Limb (ii) is an instruction to the court to seek to overcome evidential difficulties and arrive at a conclusion if it "reliably" can. It recognises that jurisdiction challenges are invariably interim and will be characterised by gaps in the evidence. The Court is not compelled to perform the impossible but, as any Judge will know, not every evidential lacuna or dispute is material or cannot be overcome. Limb (ii) is an instruction to use judicial common sense and pragmatism, not least because the exercise is intended to be one conducted with "due despatch and without hearing oral evidence"...Where there is a genuine dispute judges are well versed in working around the problem... where there is a dispute between witnesses it might be possible to focus upon the documentary evidence alone and see if that provides a sufficient answer which then obviates the need to grapple with what might otherwise be intractable disputes between witnesses".
- 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. "limb (iii) is intended to address an issue which... arises where the Court finds itself simply unable to form a decided conclusion on the evidence before it and is therefore unable to say who has the better argument. What does the judge then do?.... the solution encapsulated in limb (iii) addresses this situation. To an extent it moves away from a relative test and, in its place, introduces a test combining good arguable case and plausibility of evidence. Whilst no doubt there is room for debate as to what this implies for the standard of proof it can be stated that this is a more flexible test which is not necessarily conditional upon relative merits"
As applied to the present case, the Defendant submitted that the Master was to determine:
- whether the contract in respect of which the claim is made existed and was legally binding;
- whether such contract contained a valid and effective jurisdiction agreement in favour of the English Courts binding on the defendant;
- the dispute falls within the scope of that jurisdiction agreement.
As the facts were heavily contested, it is worth noting that the Master reminded herself that her function was not to conduct a mini trial at this interim stage, citing paragraph 76 of the Kaefer 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". It was accepted that the burden of proof lay on the Claimant, but the Master was clear that it was not a burden on the balance of probabilities, given she was not weighing the evidence as at trial. Accordingly, the Master found Green LJ's formulation of the "burden of persuasion" in Kaefer to be a helpful indicator.
A Merits Threshold Test?
It remains unclear whether CPR 6.33 (2B)(b) includes a test on the merits of the claim. The Master referred to Naftiran Intertrade Company (Nico) Ltd v GL Greenland Ltd  EWHC 896 (Comm),  (Julia Dyas KC sitting as a High Court Judge) and noted there is a "judicial question mark" over whether, once a 'good arguable case' has been established, CPR 6.33(2B)(b) further requires separate consideration of the merits, in line with the 'serious issue to be tried' requirement in an application for service out of the jurisdiction where court permission is required.
As the position was, thus, uncertain, the Master was content to examine this threshold, but as part of the alternative case on service under CPR 6.36 advanced by the Claimant. This was not because, however, the Master had any doubts about her findings on CPR 6.33(2B)(b) but because simply because of the change to the rule remained relatively new and untested. Accordingly, if she were wrong about it, it would "make sense to examine and apply the principles of the more traditional route to securing good service out of jurisdiction."
The Master referred to the notes to the White Book at 6.37.15 which give guidance on the different standards of proof between the test for a good arguable case and whether there is a serious issue to be tried, as follows: where there is an ingredient to the cause of action relevant for both tests, the "lower standard of proof for (1) is subsumed into the higher (for 2) and becomes irrelevant." As the Master had already examined the question of whether the Claimant had a good arguable case on the facts and/or law, there was no need to re-examine matters for the lower threshold of a real (as opposed to fanciful) prospect of success.
Mixed Claims under CPR 6.33(2B)(b)
It is worth noting that the case raised the interesting issue of mixed claims: claims under the 2018 and/or the 2016 contract, as well as a claim in quantum meruit. Although this latter claim was orally conceded by the Claimant, the Master nevertheless addressed the issue whilst noting that what followed on this point remained strictly obiter.
In summary, the argument had focussed on whether it is correct to interpret CPR 6.33 (2B)(b) as allowing a mixed claim to be served without permission; i.e., where the claim form included claims that did not fall within the underlying contract, and therefore without the scope of the jurisdiction clause. Hence, the issue was whether, in these circumstances, CPR 6.33(2B)(b): should not be relied upon at all; or should be relied upon only for the claims falling within contractual terms, with the remainder of the claims requiring permission for service out of the jurisdiction.
The Master referred to the pleadings and to Chitty on Contracts for a proper understanding of claims in quantum meruit where a contract does not provide for the remedy. Turning then to the wording of the rule itself, the Master noted: (i) the rule was relatively new at the time of service, (ii) it is extremely brief, and (iii) that the wording explicitly differs from that in PD6B paragraph 3.1(6) by referring to "a contract claim" rather than one "in respect of a contract" which has been interpreted to include quantum meruit claims. In the absence of any authority to extend the scope of the clearly drafted rule beyond its plain and natural meaning, the Master concluded that the claim for a quantum meruit was outside of the scope of Rule 6.33(2B)(b), such that the Claimant should not have served it without seeking the court's permission.
Notwithstanding this conclusion, the Master further noted that, from 1 October 2022, a new rule 6.33 (2B)(c) came into effect, which seeks to deal with the perceived lacuna created by Rule 6.33(2B)(b), such that claims made "in respect of a contract" can now be served out of jurisdiction without court permission.
More broadly, the Master considered that the presence of one claim requiring permission for service out did not have any impact on other claims that had met the test for service out without permission under 6.33 (2B)(b). Accordingly, had the claim in quantum meruit not been conceded, the only way it could have avoided being struck out would have been an order granting permission for service out retrospectively, or an order dispensing with service.
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