Bill Kenwright Limited v Flash Entertainment FZ LLC [2016] EWHC 1951 (QB) – Service, Gateways and Forum Non Conveniens

This case comment is by Kate Boakes of 12 King’s Bench Walk.

Haddon-Cave J’s judgment sets out practical guidance on issues of jurisdiction, forum non conveniens, contract formation, and alternative service in the context of service out of the jurisdiction.

Facts

The Claimant, a theatre and production company incorporated in England, brought proceedings against the Defendant, an organiser and promoter of live events incorporated in the UAE. The Claimant sought to enforce a settlement agreement said to have been reached during an international telephone conversation between the parties’ respective chief executives, whereby the Defendant allegedly agreed to pay £500,000 to the Claimant. The Defendant denied the existence of such an agreement.

The Claimant served proceedings on the Defendant at its offices in Abu Dhabi by registered post, having been granted permission to do so. The Defendant challenged service on various grounds.

The issues

The issues to be decided were:

  1. Did the English courts have jurisdiction?
  2. Was the Master wrong to permit the Claimant to serve the proceedings by registered mail?
  3. Did the Master have power to order that the proceedings would be deemed served on the second business day after they were posted?

Decision

Did the English courts have jurisdiction?

Paragraph 11 of the judgment sets out a helpful summary of the applicable principles

In order to succeed, the Claimant had to show that (1) it had a ‘much better argument on the material available’, and (2) the claim fell within one of the jurisdiction gateways in PD6B.

The first limb of the test required the judge to analyse the evidence for and against the existence of a settlement agreement. This exercise is naturally case-specific and this section of the judgment will not be of general interest to international practitioners. The judge found in the Claimant’s favour and therefore proceeded to the next limb, the gateway question.

The Claimant relied upon three gateways:

  1. gateway 3.1(6)(a) (a contract made within the jurisdiction);
  2. gateway 3.6(6)(c) (a contract governed by English law); and/or
  3. gateway 3.1(7) (a contract breached within the jurisdiction).

The Claimant’s case was that during the alleged telephone call, the Defendant’s chief executive (in Abu Dhabi) had accepted a counter offer made by the Claimant’s chief executive (in England). The judge held that this was a classic application of the rule in Entores LD v Miles Far East Corporation [1955] 2 QB 327, that where a contract is concluded by instantaneous communication such as a phone call, (a) the contract is only complete where acceptance is received by the offeror and (b) the contract is made at the place where the acceptance was received. It followed that on the facts of this case, the alleged contract was made in England and the Claimant succeeded on its first gateway.

The judge also set out in brief terms what he would have found in relation to the other two gateways.

In relation to the second, where there was no express choice of law, Rome I, Article 4 provided that the governing law of a contract is that of the country with which it is most closely connected, which is presumed to be that of the country where the party required to effect the ‘characteristic performance’ of the contract has habitual residence. That presumption is displaced where it is clear from all the circumstances that the contract is more closely connected with a country other than that indicated. The judge held that the performance of the settlement agreement was the payment of money, which would indicate that the governing law was that of the UAE, however he held that on the facts of this case the presumption was weak and displaced by the fact that the settlement agreement was more closely connected with England than Abu Dhabi, particularly because the ‘key meetings and negotiations’ took place in England and the invoices provided for payment in England.

In respect of the third gateway, he held that because (a) under English law it is the duty of the debtor to seek out the creditor at their residence or place of business, and (b) the invoices provided for payment into English bank accounts, any breaches by the Defendant were made in England.

The Claimant having succeeding in showing that it had a ‘much better argument on the material available’, and the claim fell within one of the jurisdiction gateways, the judge went on to consider the Defendant’s argument of forum non conveniens. He held that England was the natural forum for the proceedings because:

  1. the witnesses were more readily available in England;
  2. the correspondence and documents were in English. UAE civil procedure required that all evidence must be heard in Arabic. Hence all witness evidence and documents would have to be translated into Arabic were the case to be heard there;
  3. the agreement was governed by English law and it would best to have matters of English law determined by an English court.

Was the Master wrong to permit the Claimant to serve the proceedings by registered mail?

The Judge held that the Master was justified in finding that there was ‘good reason’ to effect alternative service of these proceedings because:

  1. There was a risk of serious delay if service had been carried out under the Service Treaty between the UK and the UAE;
  2. the Defendant had said that proceedings could be served at the address in question;
  3. Service by registered post is not contrary to UAE law;
  4. There was no inordinate delay on the part of the Claimant prior to or post the issue of proceeding;
  5. the Claimant made proper attempts to serve the proceedings on the Defendant at its address and copies were sent to the Defendant’s General Counsel;
  6. Deutsche Bank v Sebastian Holdings[2014] EWHC 112 and Knauf UK GmBH v British Gypsum Ltd [2002] 1 WLR 907 were distinguishable. In Deutsche, unlike the present case, it was not suggested that the delay to service would be significant in the context of the proceedings. In Knauf, unlike the present case, there was evidence that the claimant was trying to gain priority under the Brussel’s Convention by serving using a quicker method than that provided for by Treaty. The application for alternative service in the present case was not characterised by a mere desire for speed but included proof of lengthy delay in the context of the case if the Service Treaty method was used.
  7. The Defendant had been aware of the proceedings for a long time and it would be pointless, and not in accordance with the overriding objective, to make the Claimant re-serve proceedings of which the Defendant was already entirely cognisant.

Did the Master have power to order that the proceedings would be deemed served on the second business day after posting?

The Defendant argued that the Court had no power to make an order for ‘deemed service’ in cases which involve service out of the jurisdiction. The Judge carried out a detailed analysis of the relevant rules, including CPR 6.15. He held that because CPR 6.15(4)(b) expressly requires an order for alternative service to specify “the date on which the claim form is deemed served“, the Court must have the power to include a deeming provision. Accordingly, he was satisfied that the Master had jurisdiction to make the order for deemed service and that he had not been wrong to do so.

Comment

This decision comprehensively sets out welcome practical guidance on a number of procedural issues commonly faced by international practitioners.

The most interesting point is that it seems to demonstrate a low threshold in respect of what is a “good reason” to effect alternative service. This decision appears to have turned on delay. The delay was likely to have been between 3 and 8 months on the evidence, and the Judge held that, along with the other factors, this was a sufficient reason for the Master to have ordered alternative service, despite the existence of a service treaty between England and the UAE.

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