The High Court concludes that the common law ‘necessary or proper party’ gateway for service out of court does not apply where the principal defendant has voluntarily submitted to the jurisdiction of the court

The High Court has held that the “necessary or proper party” gateway contained in CPR Practice Direction 6B, Section 3.1(3) does not apply where the principal defendant has voluntarily submitted to the jurisdiction of the court: ID versus LU and BZ [2021] EWHC 1851 (Comm).

In a case in which neither party was domiciled or resident in England, and the subject matter of the dispute related exclusively to Ukraine, the High Court confirmed that this gateway should not be applied in such a way as to allow a party unconnected with the jurisdiction to sue in England against their will solely because of another defendant’s willingness to submit to the jurisdiction for their own reasons.

Following the end of the Brexit transition period on 31 December 2020, common law gateways for service out of court with leave of court have gained in importance, as they apply to defendants domiciled in the EU as well as non-EU defendants (unless there is a jurisdiction clause in favor of the English court, in which case proceedings can be served without the need to obtain permission from the court) .

It is therefore helpful that the High Court has confirmed that a plaintiff seeking leave from the court under the “necessary or proper party” gateway cannot rely on a principal defendant who has voluntarily submitted to jurisdiction. but which could not otherwise have been served in accordance with the CPR. It should be noted, however, that the claimant has applied for leave to appeal against the High Court‘s decision.

context

The plaintiff and the two defendants (D1 and D2) were Ukrainian nationals. The plaintiff and D2 were both domiciled and residing in Ukraine. D1 was domiciled in an EU Member State.

After issuing the claim form, the claimant sent a copy of the claim form and claim details to D1. D1 acknowledged service and in doing so voluntarily submitted to the jurisdiction of the English court.

Plaintiff subsequently obtained leave to serve the Out of Jurisdiction Proceedings on D2, primarily on the basis that D2 was a “necessary or proper party” to the claim brought against D1 for the purposes of CPR Practice Direction 6B, subsection 3.1(3) . This provides, insofar as it is material:

“3.1 The plaintiff may serve a claim form out of jurisdiction with leave of the court under Rule 6.36 where – …

3) A claim is made against a person (“the defendant”) on whom the claim form has been or will be served (other than on the basis of this paragraph) and –

(a) there is a genuine dispute between the plaintiff and the defendant that it is reasonable for the court to decide; and

(b) the applicant wishes to serve the application form on another person who is a necessary or appropriate party to this application. »

D2 sought to have the order authorizing service and purported service on D2 set aside. D2 also sought a declaration that the English court lacked jurisdiction to adjudicate the claim against D2 or, in the alternative, that the English court should not exercise any jurisdiction it might have.

D2 argued that the applicant was not entitled to invoke subsection 3.1(3), essentially, because at the time D1 was sent, the application form and details of the D1 application could not be validly served under the CPR. Indeed, D1 had an irrefutable objection to jurisdiction by reference to Article 4 of the recast Brussels Regulation (EU) No 1215/2012, which required that he be sued before the courts of the Member State of EU in which he was domiciled (subject to exceptions provided for in the regulations, which did not apply here).

Decision

The High Court (His Honor Judge Pelling QC sitting as High Court Judge) granted D2’s claim on the grounds that: (a) the gateways relied on by the claimant were not available in the circumstances; and (b) in any event, it was clear in all the circumstances that England and Wales was not the appropriate place to make the claim.

Gateway “Necessary or appropriate part”

D2 relied on the decision of the House of Lords in John Russell and Company Ltd v Cayzer Irvine and Company Ltd [1916] 2 AC 298. This was a case tried under the old Rules of the Supreme Court (RSC) rather than the CPR and therefore the High Court had to decide whether John Russell still applied.

The relevant CBC permitted service out of jurisdiction where: “any person out of jurisdiction is a necessary or proper party to an action duly brought against another person duly served in the jurisdiction”.

John Russell was a claim against two registered Scottish companies. The first defendants decided to submit to the jurisdiction of the English court and the plaintiff then served the second defendants in Scotland. The second defendants sought to have service of the proceeding set aside on the ground that the action had not been “properly brought against another person duly served in the jurisdiction”. The House of Lords agreed, holding that a party unconnected with the jurisdiction should not be engaged against their will in litigation in that jurisdiction other than in accordance with the procedure provided by the CBC.

The High Court in this case observed that John Russell has not been overruled by any subsequent decision of the House of Lords or the Supreme Court, but that it should be read subject to the decision of the Court of Appeal in The Benarty [1983] 1 Lloyd’s Rep 361. The Benarty restricts the principle established in John Russell, limiting it to cases where, at the time the action was brought, there was no one on whom the action could be served and it was only later that one of the defendants accepted service in the spring. The High Court questioned the validity of the distinction drawn in The Benarty but nevertheless considered itself bound by this distinction.

There was no evidence to suggest that the claim against D1 did not fall within the narrower conception of the principle in John Russell. The High Court therefore accepted that, that the broader view of John Russell or the narrower vision adopted in The Benarty applied, D2 was entitled to prevail.

The High Court did not consider that the change in language between the relevant RSC and the current language of the gateway in Section 3.1(3) either removed the principle in John Russell or the limitation imposed by The Benarty.

The court observed that the overriding importance of John Russell now is that it establishes part of the context in which subsection 3.1(3) is to be interpreted, by identifying a rationale for adopting a restrictive interpretation of what has always been described as an anomalous provision that has the ability to be exorbitant in its scope. Subsection 3.1(3) has two elements that together protect against this effect:

  • The first requirement, that the claim form must have been served on the principal respondent other than in reliance on subsection 3.1(3), is intended to ensure that a party unconnected with the jurisdiction is not drawn into a litigation in England merely because another defendant to the claim, who could not be served with the proceedings otherwise than by consent, considers it proper that the claim against him should be resolved in England.
  • The second requirement, that there is a real issue which it is reasonable for the court to adjudicate against the primary defendant, is a merits-based protection, designed to ensure that a party who is outside the jurisdiction cannot be brought into jurisdiction by reference to a claim that has been served on a primary defendant but is doomed to fail.

The court found that on the facts there was a genuine dispute between the plaintiff and D1 which it was reasonable for the court to find. However, that said nothing about where this issue should be resolved and whether a party unconnected with the jurisdiction should be brought into that jurisdiction against their will because another defendant in the proceeding considered them to be in their commercial interest to voluntarily submit to the jurisdiction of the English court.

Forum conventions

The High Court indicated that even if subsection 3.1(3) had been available to the claimant, it would have declined jurisdiction over it. forum conveniens lands. The request had no real connection with the jurisdiction. None of the parties was domiciled or resident in England and the subject matter of the litigation related exclusively to Ukraine.

Even if, contrary to the conclusions of the Court, the principle in John Russell was no longer a technical basis for denying jurisdiction, the court would have considered the fact that the only basis on which the court could have jurisdiction was the voluntary submission of another defendant as a powerful discretionary factor justifying the setting aside of the permission on forum conveniens lands. The court reiterated that subsection 3.1(3) is anomalous and should not be applied in such a way as to allow a party unconnected with the jurisdiction to be engaged in litigation in England against their will solely because of the will of another defendant to submit to the jurisdiction for their own reasons.

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