JSC BTA Bank v. (1) Mukhtar Ablyazov (2) Ildar Gayarevich Khazhaev and others [2011] EWHC 2988 (Comm)
Summary
The Claimant was granted an extension of time and the right to serve the Claim Form and Particulars of Claim on the Second Defendant’s English solicitors, instead of having to effect service in Russia. This was on the basis that there was a real danger that the Second Defendant would seek to avoid service in Russia and the two year delay necessary to effect service may impede the proper disposal of the proceedings which involves seven other Defendants.
Background
The Claimant is a Kazakhstani bank which is currently suing its former chairman, Mukhtar Ablyazov, alleging large scale fraud and misappropriation of approximately US $269m.
The Second Defendant, a Russian National, was employed by the Claimant in its Moscow office, and is alleged to have helped the First Defendant by voting in favour of resolutions to approve loans in favour of the companies owned or controlled by the First Defendant.
The Claimants contacted the Second Defendant’s English solicitors to enquire whether they would accept service of the Claim Form on the basis that they had been instructed to do so in two previous proceedings. Two days before the expiry of the validity of the Claim Form, the Claimants applied to have it served in Russia through the official channels and were informed that this process could take up to two years. At the same time, the Claimant also applied for an order for alternative service.
The Decision
In relation to the extension of time, the Court stated that the rules under CPR r.7.6(2) must be interpreted in light of the decision in Cecil v. Bayat [2011] EWCA Civ 135, i.e. that in cases where the extension of the validity of a Claim Form would prejudice the Defendant’s limitation defence, it must be shown not only that there is a good reason to extend the validity of the Claim Form, but that such good reason must be able to “surmount” the limitation defence by, for example, showing that the difficulties in service were caused by circumstances outside of its control.
In the present case, the Claimant succeeded in its application on the basis that, notwithstanding a small delay during the without prejudice negotiations, he had acted promptly in preparing the documentation for service, but nevertheless the time period for service in Russia, currently estimated at between 9 and 24 months, would have made it practically impossible for him to serve the claim form within the specified time frame.
In relation to the issue of alternative service, the Court stated that a mere desire for speed on behalf of the Claimant did not amount to a “good reason” as required by CPR r.6.15. However, the Court went on to state that regard must be had in cases involving multiple Defendants, or where time was of essence, whether the delay in service would otherwise prejudice the proceedings.
The Court granted the Claimant’s application on the basis that there was enough evidence to suggest that, taking into account the voluntary nature of service in Russia, and the evidence of the Second Defendant that he was financially and practically unable to defend these current proceedings, the Second Defendant would most likely seek to evade service in Russia.
In so ruling, the Court also took into account the fact that there would be a small risk, that the delay in serving the Second Defendant may impede the proceedings against the other seven Defendants.
Comment
In cases where service abroad would take considerable time and there is a history of service being accepted by a party’s English solicitors, regard must be had as to whether to make an application for alternative service. Any such application for alternative service must be based on something more than just the desire to speed up the proceedings.
