UK Supreme Court clarifies when retrospective alternative service out of the jurisdiction is permitted

The Supreme Court has considered when an order can be made retrospectively declaring that steps taken to bring a claim form to the attention of a defendant outside of the jurisdiction amount to good service: Abela and others v Baadarani [2013] UKSC 44.

In cases not involving the Hague Service Convention or a bilateral service treaty, the claimant merely needs to show "good reason" for the order to be made; there is no requirement for "exceptional circumstances", contrary to the decision of the Court of Appeal in this case (considered here).

"Good reason" will require the judge to evaluate a number of factors and the appeal court should only interfere if the judge erred in principle or was wrong in reaching his conclusion. There is no requirement that the method of service be valid under local law, only that it is not contrary to that law. The decision also observes that characterising service outside the jurisdiction as being "exorbitant" is outdated.

Service where there is no convention or treaty in place can be difficult and lengthy. Service through foreign governments and British consular authorities for example can take many months. The decision is therefore welcome.

Wherever possible, however, it will still be preferable to serve in accordance with the usual service provisions in CPR 6.40, which include service by a method permitted under the law of the country of service. This is particularly so where the limitation period is about to expire or the judgment will need to be enforced overseas. Where limitation is an issue, there will be a continuing risk that a judge may decide there is no "good reason" to validate alternative service retrospectively or that a decision in the claimant's favour may be overturned on appeal following an inter partes hearing. Where enforcement takes place overseas, the enforcing court may not accept that the proceedings were properly served pursuant to such an order. 

Background

The case concerns an alleged fraud whereby the claimant purchased shares in an Italian company which were worthless, or worth less than the sum paid. There were a number of orders made by the court concerning service and extending the validity of the claim form, but the issue before the Supreme Court was whether delivery of the proceedings to the defendant's attorney in Lebanon during the validity of the claim form was good service.  No order had been made by the English court permitting service on the attorney and this was not a valid form of service under Lebanese law. The attorney had no authority from the defendant to accept service of the proceedings.  Sir Edward Evans-Lombe, sitting as a High Court judge, retrospectively declared the service to be effective but this was overturned by the Court of Appeal.

As there is no service convention or treaty with the Lebanon, absent an order for alternative service, service could only be effected under CPR 6.40(3)(a)(ii) through the government, judicial authorities or the British consulate or under CPR 6.40(3)(c) by a method permitted under the law of the Lebanon.

Decision

Lord Clarke gave the judgment of the court. He first put to rest the question of whether the court had power under CPR 6.15(2) to make an order for retrospective service where service had taken place out of the jurisdiction. It was conceded before the Supreme Court that CPR 6.15(2) could be so used and in his view that concession was correctly made.

He then clarified that alternative service comes into play where no other method of service has been successfully adopted. The only bar at that stage is that nothing can be ordered or authorised which is "contrary to the law of the country where the claim form ... is to be served" (CPR 6.40(4)).

In a case not involving the Hague Convention or a bilateral service treaty, the court should simply ask if there is a good reason to make the order sought. There is no additional requirement for "exceptional circumstances" in contrast to where an order dispensing with service altogether is sought under CPR 6.16.

As regards whether there was "good reason" to make the order on the facts of this case, Lord Clarke pointed to the following:

• The defendant knew about the existence and content of the claim form. This was not sufficient without more, but it was a "critical" factor.
• His attorney had received the documents in Beirut and then provided them to the English solicitors he instructed.
• Service through diplomatic channels had proved impractical.
• The defendant was unwilling to cooperate by disclosing his address in Lebanon. He wasn't under a duty to do so but this was a "highly relevant" factor.

The judge was therefore entitled to reach the conclusion he did.

As for whether the method of service had to be good service under local law as opposed to not contrary to that law, the Court of Appeal's interpretation was incorrect as it would make the provision allowing service by a method permitted under the law of the country of service otiose.

Finally, regarding events before the issue of the claim form, Lord Clarke accepted the submission that save perhaps in exceptional circumstances events before the issue of the claim form are not relevant. The focus is on why the claim form cannot or could not be served within the period of its validity.

Lord Sumption gave a brief judgment commenting on the traditional characterisation of service out of the jurisdiction, which has been seen as the exercise of an "exorbitant" jurisdiction involving the assertion of sovereign power over the defendant and a corresponding interference with the sovereignty of the state in which process was served. This was no longer a realistic view of the situation. In the overwhelming majority of cases where service out is authorised there will have been either a contractual submission to the jurisdiction or else a substantial connection between the dispute and this country. Litigation between residents of different states "is a routine incident of modern commercial life" and a similar jurisdiction is exercised by many other countries. The decision now is generally a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum.

Comment

The Abela decision expressly does not deal with alternative service where the Hague Convention or another convention or treaty applies. The court was alive to the risk in those circumstances of subverting the provisions of the convention or treaty. There are 68 signatories to the Hague Convention and the EU Service Regulation governs service of proceedings in member countries of the EU. There are however still a substantial number of countries, such as the Lebanon, where there is no treaty or convention and for service in those countries this decision is of assistance.

Where it can be shown, as here, that the defendant is well aware of the proceedings and the nature of the claims made, the court will not look kindly on "technical games". As commented above however, alternative retrospective service is not without its dangers, particularly where the claim is commenced near the end of the limitation period or enforcement overseas will be necessary.