ENGLISH COURT UPHOLDS ALTERNATIVE SERVICE OUTSIDE THE HAGUE SERVICE CONVENTION OF AN ORDER FOR ENFORCEMENT

In the recent case of M v N [2021] EWHC 360 (Comm), the English High Court upheld its earlier decision to allow alternative service outside the Hague Service Convention (“HSC”) of an order granting enforcement of an award under section 66(1) of the Arbitration Act 1996 (“1996 Act”).

This decision is in line with the pro-enforcement policy of the English courts and confirms the availability of alternative service outside the HSC in respect of claims for relief under the 1996 Act, especially where service in accordance with the HSC may involve inordinate delays.

Background

M obtained an award against N in English-seated GAFTA arbitration proceedings in January 2019. The award had not been challenged by N within the time limits under the 1996 Act, but it nevertheless remained unpaid more than two years later. M had sought to enforce the award against N in Egypt, but enforcement was resisted by N on public policy grounds.

In December 2020, M applied to the English High Court to enforce the award under section 66(1) of the 1996 Act. The court (Cockerill J) ordered the enforcement of the award and permitted service of the order on N outside the jurisdiction of England and Wales. The court also allowed alternative service outside the HSC by permitted service via email to N’s vice chairman and recorded delivery to N’s address.

N applied to the English High Court to set aside the order permitting alternative service.  It argued that Egypt, as a signatory to the HSC, had objected to service otherwise than through its designated authority and so alternative service outside the HSC should not have been ordered. The application to set aside the order came before Foxton J.

Decision of the English High Court

Taking CPR 6.15(1) as the starting point, the court noted that alternative service can be ordered as long as there is “good reason”.

Where the defendant is domiciled in an HSC signatory country, it will be relevant to consider whether that country has stated its objection under the HSC to service otherwise than through its designated authority (as Egypt has done). In addition, merely avoiding delay or inconvenience will not be sufficient to establish a “good reason” for alternative service. The applicant will need to show “exceptional circumstances” or “special circumstances” justifying alternative service, notwithstanding the significance of the country’s objection to service otherwise than through its designated authority.

The court noted that while there was some debate around what constituted “exceptional circumstances” or “special circumstances”, the English court “routinely” orders alternative service where relief is sought under the 1996 Act, even in HSC cases. For instance, it was the “almost invariable” practice of the court to order alternative service on the solicitors acting in the arbitration, as is reflected by paragraph 3.1 of Arbitration Practice Direction 62.4. In this context, alternative service is not motivated by a mere desire for speed in effecting service. Rather, it is inherently desirable and in the interests of all parties that if arbitration applications are made in relation to either pending or otherwise completed arbitrations that they are determined by the court as soon as reasonably practicable, consistent with their being dealt with justly. This approach contributes to the achievement of finality of the arbitral process.

The court noted that while most authorities concerned pending arbitration proceedings or challenges to arbitration awards, the policy of “speedy finality” favoured by the court “might be thought to be even more compelling” in relation to enforcement of arbitration awards due to (1) the strong pro-enforcement policy of the English court and (2) the fact that the alternative service is being effected after the substantive dispute between the parties has been determined by a tribunal whose jurisdiction is no longer open to challenge.

Turning to the facts of the case, the court observed that effecting service in Egypt through the designated authority normally took nine months, and that period had become significantly longer due to the Covid-19 pandemic (at least 12 months). In these circumstances, the court found that alternative service was “amply justified”, given that:

• the application was brought to assist in the enforcement of an award given by a tribunal sitting under the auspices of the 1996 Act, and the policy of speedy finality was therefore engaged;
• N had fully engaged in the arbitral proceedings through English solicitors and counsel and this was not a case where the connection between N and the court was being initiated through alternative service;
• the award had been outstanding for two years;
• the effect of the delay in service would prolong the period for which the order granting enforcement under section 66(1) would remain stayed (Cockerill J had ordered a stay on enforcement in England for 22 days after service of the order on N). This was inimical to the policy of speedy finality espoused by the English court; and
• the method of service was likely to be (and had been) effective in bringing the order to N’s notice.

Accordingly, N’s applications to set aside alternative service failed.

Comment

The authorities considered by the court show that alternative service outside the HSC is routinely granted in respect of pending arbitral proceedings or challenges to awards. This case, however, also demonstrates the availability of alternative service outside the HSC for the purpose of enforcing an award. It illustrates the English court’s pro-enforcement approach, underscored by the desire to achieve “speedy finality” of the parties’ dispute.

Further, it is notable that the methods of alternative service upheld in this case were service by email to the award debtor’s vice chairman, and recorded delivery to the award debtor’s address. The method of alternative service routinely allowed in arbitration proceedings is service on the parties’ solicitors acting in the arbitration. This approach makes the point that the English courts are receptive to other modes of alternative service in the arbitration context, and once again underlines the pro-enforcement attitude of the court.

For more information, please contact Craig Tevendale, Partner, or your usual Herbert Smith Freehills contact.

The authors would like to thank Asmita Singhvi for her assistance in preparing this blog post.