Various issues fell to be considered in this case:
- What was the governing law of a settlement agreement entered into between the English claimant and the defendant, which is incorporated in the UAE? Under the Rome 1 Regulation, in the absence of an express choice of law, a contract is governed by the law of the country with which it is most closely connected, and for a contract that is presumed to be the country where the party required to effect the "characteristic performance" of the contract has its habitual residence. The issue here was whether the "characteristic performance" was the payment of settlement amounts by the defendant (which would result in the law of the UAE), or the forbearance by the claimant not to sue (which would result in English law). Haddon-Cave held that: "where, as here, one is concerned with a 'vanilla' settlement agreement, i.e. the mere payment of money by A to discharge a debt or sums due by way of compensation to B with no obligation on B save for forbearance to sue, the "characteristic performance" of the settlement agreement may properly to be regarded as the payment of money".
However, that presumption was a weak one and displaced here by the fact that the settlement agreement was more closely connected with England, in particular because key meetings and negotiations took place there, and, additionally, the invoices provided for payment in England.
- The defendant appealed against an earlier order permitting service by an alternative method (pursuant to CPR r6.15), namely service by registered mail. The defendant sought to rely on Deutsche Bank v Sebastian Holdings (see Weekly Update 05/14), in which it was held that questions of convenience and possible speed were not sufficient in themselves to justify service by alternative means. The judge distinguished that case on the basis that the delay in Deutsche would not have been significant, whereas here there was a risk of serious delay (possibly up to 8 months to serve under the treaty between the UK and the UAE, according to the Foreign Process Section of the RCJ). Although the existence of a treaty is something which the court should take into account, "the matter is not immutable". Furthermore, service by registered post was not contrary to UAE law and the defendant had been aware of these proceedings for a long time.
Accordingly, the order for service by an alternative method was not set aside.
- The defendant had sought to argue that the court had had no power to order that service by this alternative method would be deemed to take place on the second business day after posting. That argument was rejected by the judge. Although the general position is that there is no deemed service for service out of the jurisdiction (CPR r47), CPR r6.15(4) allows the court which authorises service by an alternative method to specify "the date on which the claim form is deemed served".
COMMENT: The high watermark for claimants seeking permission to serve by an alternative method was the Supreme Court decision of Abela v Baadarani (see Weekly Update 24/13). Since then, there appears to have been some rowing back by the lower courts in cases such as Deutsche and so this case is of interest in that the judge was prepared to accept an alternative method should be allowed in view of the possible long period of delay for service otherwise (although the defendant had sought to argue that the delay would only be three months it was held that the master had been entitled to assume the longer period and regard it as inordinate delay). In any event, in Key Homes v Patel (see Weekly Update 2/14), the judge (although it was strictly unnecessary for him to do so, since he had already concluded that valid service had been effected) concluded that there were exceptional circumstances which would have permitted him to allow alternative service. There, the Foreign Service Section of the RCJ had advised that service in the UAE would take between 6 and 12 months.