Dangers of filing further acknowledgement of service when appealing jurisdiction judgment

The Court of Appeal has held that filing a further acknowledgement of service following an unsuccessful jurisdiction challenge amounts to submission to the English jurisdiction. This is so even if the defendant is appealing against the jurisdiction judgment: Deutsche Bank AG London Branch v Petromena ASA [2015] EWCA Civ 226.

To avoid judgment in default being entered in these circumstances, a defendant should agree or apply for an extension of time for filing the acknowledgement until after the appeal has been determined.

If a further acknowledgement of service is inadvertently filed, an immediate application should be made, supported by evidence, for permission to withdraw it.

If the defendant has submitted to the jurisdiction, the present decision suggests that this may not prevent him from applying for a stay of the English proceedings on the basis that there are parallel proceedings pending in another EU or Lugano Convention country. There are however contradictory authorities on this point, so the safer course would be to apply for a stay without taking any step that amounts to submission to the jurisdiction and within the relevant procedural time limit for challenging jurisdiction.

Background

Where the English court has rejected a challenge to its jurisdiction, CPR 11(7) provides that the acknowledgement of service already filed will cease to have effect and the defendant may file a further acknowledgement of service within 14 days, or such other period as the court may direct.

CPR 11(8) goes on to provide that if the defendant does file a further acknowledgment "he shall be treated as having accepted that the court has jurisdiction to try the claim".

In the present case, the defendant challenged the English court's jurisdiction on various grounds. The High Court rejected the jurisdiction challenge, refused permission to appeal and made an order permitting (but not requiring) the defendant to file a further acknowledgement of service within 14 days under CPR 11(7).

The defendant then filed a second acknowledgment of service and, five days later, applied to the Court of Appeal for permission to appeal, which was granted. The claimant contended that the defendant had submitted to the jurisdiction by filing the second acknowledgement.

Decision

The Court of Appeal found that the defendant had submitted to the jurisdiction. The wording of CPR 11(8) was clear and there was no room for looking at the surrounding circumstances. The "disinterested bystander test" which had applied pre-CPR had no application post-CPR, at least where the wording of the rules was concerned ("statutory submission" as Lord Justice Floyd termed it, as opposed to "common law waiver", ie the doing of an act inconsistent with maintaining a challenge to the jurisdiction).

The Court of Appeal considered this interpretation to be consistent with the rules on submission in Article 24 of the Lugano convention (which was applicable as Petromena was a Norwegian company). This interpretation of the rules did not impair the operation of the Convention as the defendant was not compelled to file a further acknowledgement in order to protect his position on the merits: he could apply for a stay or an extension of time if he wished to continue his challenge.

The court noted that it is possible to apply to withdraw an acknowledgement of service under CPR 10 PD para 5.4 and 5.5, but the application must be made promptly and supported by evidence. On the facts, no such application had been made and the court was not prepared to consider an informal application made in the defendant's skeleton argument for the appeal. No guidance is given on when a defendant might be permitted to withdraw an acknowledgement of service; the court merely commented that it was pointless to speculate, some 15 months after the acknowledgement was filed, whether the application would have had any chance of success.

Comment

Message to defendants

This decision gives a clear message to defendants who have unsuccessfully challenged the English court's jurisdiction:

• If the defendant intends to defend the claim then a further acknowledgment should be filed and the case will proceed in the usual way.
• If he intends to take no part in the proceedings and to take his chances on enforcement then he should do nothing.
• If however he intends to appeal the jurisdiction judgment, this case shows that he should not in any circumstances file a further acknowledgement of service, as that will amount to a submission to the jurisdiction of the English court. Instead, to prevent default judgment being entered against him, he should seek an extension of time to file a further acknowledgment until after the appeal has been dealt with, either by agreement with the claimant or, if necessary, applying to the court.

Timing of an application to stay

The decision is also of interest for the Court of Appeal's comments on the timing of an application to stay proceedings under articles 27 or 28 of the Lugano Convention, where there are parallel or related proceedings already pending in a relevant jurisdiction.

Here the defendant was also pursuing appeal proceedings in Norway, in which it sought findings that the Norwegian court was first seised and that the causes of action were the same or related to the English proceedings. If successful, the defendant would have sought a stay of the English proceedings under articles 27 or 28.

The defendant argued that its conduct in pursuing the Norwegian proceedings was not consistent with agreeing to the jurisdiction of the English court: there would be no point pursuing the Norwegian appeal while at the same time submitting to the English court's jurisdiction, as it would then lose to the ability to apply for a stay under articles 27 or 28.

Lord Justice Floyd did not accept this argument, saying that article 27 took precedence over a number of earlier articles including article 24. This view is not binding, as the point was only relevant if the "disinterested bystander test" applied, contrary to the court's conclusion as noted above. It is however of interest in suggesting that an application for a stay on these grounds can be made even after a defendant has submitted to the jurisdiction.

This contrasts with the view expressed by Lord Clarke on the equivalent provisions in the Brussels Regulation, in In the matter of Alexandros T [2013] UKSC 70 considered here – though that view was also obiter; if it had been necessary for the determination of the appeal, he would have referred the question to the CJEU.