The Dekagram: 7th October 2024

Once again this week we find ourselves in the position of thanking our readers for their kind words about us to the directories. In the recently published edition of the Legal 500 members of the team are listed in Aviation and Travel and in Personal Injury (including cross border cases), where chambers is ranked as a Band 1 set. You said that chambers is the ‘the number one, go-to, travel law set with real strength in depth from top to bottom’, and we tend to agree. It gave us particular pleasure to read that the clerks’ service is regarded as ‘efficient and responsive’, ‘very organised and client focused’ and – like the barristers in the team – ‘exceptional’. Thank you all very much!

But there’s no time to rest on our laurels. Despite the best efforts of the courts to discourage them, there seems to have been a veritable avalanche of jurisdiction challenges and related satellite litigation lately, and the trend continues. Henk Soede examines a case in which the ‘information asymmetry’ between the parties meant that it was only fair that the Defendant should provide disclosure in a jurisdiction challenge, whilst Sarah Prager considers an application for permission to extend the validity of a claim form, with service outside the jurisdiction.

Disclosure in Cases Where Jurisdiction is Contested

In Alesayi v Bank Audi S.A.L. [2024] EWHC 1975 (KB), the claimant (a wealthy Saudi Arabian national) sought specific disclosure from the defendant (a Lebanese bank) in circumstances where the defendant disputed the jurisdiction of the English Court under CPR Part 11. The broader question raised by the application was framed as follows:

“can (or when should) a party be given disclosure so as to gather information where there may ultimately be no jurisdiction to try the case at all?”

Background

The claimant (“C”) commenced proceedings seeking a mandatory order from the English Court that the defendant (the “bank”) transfer his funds out of Lebanon into accounts in Switzerland. C’s contractual relationship with the bank was said to be governed by Lebanese law and subject to a jurisdiction agreement in favour of the Lebanese Courts.

C sought to rely on section 15B(2) of the Civil Jurisdiction and Judgments Act 1982 for the purposes of establishing jurisdiction. The bank disputed jurisdiction and made an application to set aside service. In turn, C made an application for disclosure of documentation which, on C’s case, was relevant to the “activities requirement” in section 15E(1)(c).

The application was disputed on various bases (see [10]-[20]) but the general objection was that a disclosure order should not be made in the context of a Part 11 challenge and that such an order required genuinely “exceptional circumstances” (citing Lungowe v Vedanta Resources Plc [2020] AC 1045 at [43]).

Judgment

Master McCloud noted, firstly, that specific disclosure in a jurisdiction dispute was not the norm and was in that sense exceptional: [33]. However, it was also recognised that disclosure should be ordered when “necessary to do justice between the parties”, though even then it should be limited to that which is proportionate given the general approach outlined in cases such as Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV and others [2019] 1 WLR 3514 and Kalo v Bankmed SAL [2024] I.L.Pr 7. At [37], it was said that:

“the court should manage a jurisdiction disclosure question so as to balance the need for proportionality, swiftness and the light touch approach in Kalo (more or less being ‘get on with it’) with the need to have at the forefront of its mind the requirement of the Overriding Objective (relied upon by the Claimant but dismissed by the Defendant as not giving rise to a separate right of disclosure) that the court must deal with cases justly.”

Master McClould held that the instant case was a “classic” scenario in which an order for specific disclosure should be made:

“A classic case is the situation which we see here where the issue of jurisdiction relates to matters very much within the Bank’s knowledge alone namely whether it directed activity to the UK, not specifically related to the Claimant’s own relationship with the Bank (the Crossbridge and London Desk issues), or where the Bank holds the best evidence of the contractual terms applicable to the Claimant’s banking relationship with it, as (it is said) varied from time to time. This was termed I think fairly as ‘information asymmetry’ by the Claimant.”

It was determined, therefore, that it would be “unjust to require a claimant in a highly asymmetric evidential position as we see here to proceed without a level playing field in this instance” and that disclosure should be ordered sufficient to enable the issues to be decided justly, provided that the disclosure sought was proportionate: [39].

About the Author

Henk Soede was called to the Bar in 2019. He has developed a specialist practice in the field of travel and private international law and is a contributing editor to the leading practitioner text in this area, Saggerson on Travel Law and Litigation (7^th Ed.). Henk has built up expert knowledge in all private international law matters, including issues relating to jurisdiction, foreign applicable law and the enforcement of foreign judgments. He also acts in contractual disputes between travel business which necessitate detailed understanding of the package travel legislation landscape. He is presently instructed by a major UK tour operator as sole counsel in a high value arbitration concerning the Covid-19 pandemic and various indemnity provisions linked to liability under package travel legislation. Henk was listed in the Legal 500 2023 and 2024 editions as a Rising Star.

Extending Time for the Service of a Claim Form: Another Warning from History

As everyone knows, the six month deadline for service of a claim form can be a laughably short period of time within which to attempt to serve proceedings outside the jurisdiction. Well, not everyone. Judges, for example, most of whom have never attempted to serve anything, can usually be relied upon to describe the period as ‘more than generous’ and to take a dim view of any hapless solicitor seeking an extension of time who cannot evidence a rigorous approach to service and attempts made at every step of the way.

In Tumpuan Megah Development Sdn Bhd v ING Bank NV [2024] EWHC 2350 (Comm) Stephen Houseman KC took a very dim view, perhaps predictably in the circumstances.

The facts

The facts are something of a tangled web, but bear with me.

The second defendant (D2) was a supplier of bunkers which became insolvent at the end of 2014. The first defendant bank (D1) financed D2’s trade. The underlying dispute concerned the supply of marine gas oil by D2 to the claimant for two vessels in 2014 for a total value of US$937,353. The claimant had not paid for the oil and disputed the existence of the supply contracts and the supplies. In May 2017, D2, as assignor, and D1, as assignee, commenced a London Maritime Arbitrators Association (LMAA) arbitration against the claimant, in accordance with the terms of the bunker supply contracts. The claimant challenged the tribunal’s jurisdiction and in 2019 amended its defence to rely on an agreement with D2 (the SOA) which provided for Malaysian law and arbitration agreement.

The LMAA tribunal rejected the claimant’s jurisdiction challenge and ordered it to pay US$937,353 plus interest and costs. It found that the supply contracts had been entered into requiring London arbitration and that the claimant had waived its right to dispute jurisdiction by reference to the SOA, which in any event did not apply to the bunker supply transactions. In 2020 the defendants obtained leave to enforce the LMAA award as a judgment pursuant to s.66 of the Arbitration Act 1996 s.66, and in 2021 applied for that order to be recognised in Malaysia. The claimant’s challenge to registration of the judgment in Malaysia was pending before the Malaysian court.

Meanwhile, in 2020, the claimant brought Asian International Arbitration Centre (AIAC) arbitration proceedings in Malaysia under the SOA. The tribunal held that the AIAC proceedings were barred by res judicata in light of the LMAA award. The claimant’s challenge to the AIAC award was pending before the Malaysian court.

The claimant then issued proceedings in the High Court against the defendants at the end of April 2023 seeking declaratory relief and damages for alleged breaches of the SOA (namely by commencing the LMAA arbitration in May 2017 and by opposing the AIAC proceedings, leading to the AIAC award). A separate claim was made against D1 for the tort of procuring D2’s breach of the SOA, as had also been alleged in the AIAC arbitration. The claimant obtained a two-month extension of validity of the claim form and permission to serve the proceedings on D2 in Singapore. D2 applied to set aside the extension and permission to serve out. It also sought a stay under s.9 of the Arbitration Act 1996. Both defendants sought to strike out the claim as hopeless and abusive by reason of the preclusive effect of the LMAA award, the s.66 order and the AIAC award; alternatively they sought a case management stay to await the outcome of the Malaysian proceedings.

The judgment

The matter came before Stephen Houseman KC in September 2024. As so often with these challenges, one may feel that the judge first determined where the justice of the thing lay, and then worked backwards from there to the result required on the applications, which in this case succeeded.

The extension of time for service

The six-year limitation period for the claim for breach of the SOA ran from the commencement of the LMAA arbitration on 2^nd May 2017. The proceedings were issued on the last clear business day before the limitation period expired. The claimant did not take any steps to serve the claim form on D2 for five-and-a-half months. A prospective extension of validity under CPR 7.6(2) usually required a good reason and limitation was an important factor. In so holding the judge followed the decision of the Court of Appeal in ST v BAI (SA) (t/a Brittany Ferries) [2022] EWCA Civ 1037, although regular readers will recall that this was an intra-chambers grudge match between Giles Mooney KC and Linda Nelson, on one side, and Sarah Prager KC and Henk Soede, on the other, in which the claimant’s application to extend time for service in very similar circumstances was allowed. See what I mean about working backwards? Anyway, where was I? Oh yes…This is what the judge said:

“in light of the circumstances of the present case as a whole, including its extensive adversarial background and how close to the end of the limitation period it was commenced, I am satisfied that refusing any extension to the validity of the claim form is in accordance with the overriding objective of the CPR . This is so notwithstanding that only nine more days would have been needed to serve OWB’s liquidators in Singapore.”

The extension and permission to serve out were obtained on a paper application. That application did not clearly identify the limitation position or the need to show reasonable steps to effect service before the application was made (Just like ST! But with a different result). There was no sufficient basis for granting the extension and it was set aside. Further, in all the circumstances refusing any extension to the validity of the claim form was in accordance with the overriding objective of the CPR.

Permission to serve outside the jurisdiction

The extension should also be set aside on the basis that it served no purpose since permission to serve out was not justified. On the claimant’s own case on breach of the SOA, the proceedings should be stayed pursuant to s.9 of the Arbitration Act 1996. There was no basis for refusing a stay under s.9(4). It followed, then, that England was not the proper forum, and permission to serve out should be set aside.

As the judge noted:

“In so far as this feels convoluted or awkward, it has been caused by TMD’s decision to sue here in England after losing both arbitrations. There is symmetry or parity of discomfort running through the rival analyses. TMD both avers arbitral jurisdiction and denies arbitrability or operability. OWB invokes the Jurisdiction Ruling as to non-applicability of the SOA- AA and yet insists that the SOA- AA must govern any doomed claim for breach of its own terms. Schrödinger’s Cat has befriended both camps.”

I do like a cat reference in a judgment.

Abuse of process/res judicata

And now we come to what I would suggest is the real rationale underpinning the judgment – paragraph 76 of the judgment:

“The present claim is barred by preclusion arising from the LMAA Award and the Cockerill Order as reflected in the AIAC Award. It is, accordingly, hopeless and abusive. The only sensible solution is to strike it out in its entirety.”

Essentially the judge held that the claim was hopeless and abusive and should be struck out, because it was precluded by the LMAA award and s.66 order, as reflected in the AIAC award. The allegation of breach of the SOA was logically inconsistent with the tribunal’s finding in the LMAA award that it had substantive jurisdiction notwithstanding the existence of the SOA. The pleaded claim assumed the opposite. Irrespective of the s.66 order, the LMAA award was final and binding between the parties by virtue of s.58(1) and s.73(2). Section 73(2) operated as a form of statutory issue estoppel, but the requirements for a non-statutory issue estoppel were also satisfied. The fact that the claimant had not challenged the LMAA award or the s.66 order in England, but chose to resist enforcement and challenge the AIAC award in Malaysia, could not affect the res judicata analysis applicable in the English court.

Conclusion
The judgment is a reminder, albeit in a somewhat convoluted factual context, that applications for extensions of time and for permission to serve outside the jurisdiction are always fact-sensitive and that judges will apply what the court would describe as the overriding objective, but what I would describe as the ‘sniff test’ – in this case the international procedural history strongly indicated that the claim should not proceed in the courts of England and Wales, and so it did not – it may be that this is the real point of distinction between the case and the claim in ST. 

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. Together with her colleagues at Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.