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:
- Is England the right place to bring the claim?
- Do you really need to serve out of the jurisdiction?
- If so, do you need permission to serve out of the jurisdiction?
- 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.