In Societe Generale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS(1) the Commercial Court was faced with an application by the defendants to strike out claims against them on the basis that the claimant, Societe Generale (SocGen), had failed to serve claim forms that it had issued several years earlier. The claimant made a cross-application for alternative service or alternatively for service to be dispensed with under Civil Procedure Rule (CPR) 6.15 or CPR 6.16.
CPR 6.15 allows the court to make an order permitting service by an alternative method or at a place not otherwise permitted under the CPR where it appears that there is a good reason to authorise such service.
CPR 6.16 provides that the court may dispense with service of a claim form in exceptional circumstances.
The court refused the cross-application and struck out the claim forms. This was an entirely unsurprising decision on the facts, but the judgment contains a useful distillation of the principles relevant in this area.
The defendants, entities in the Goldas group, were based in Turkey and Dubai. The claims arose out of supplies of gold bullion by SocGen to Goldas in 2007 and 2008, worth about $483 million. The defendants failed to pay for the bullion, despite having used it in jewellery manufacture or in some cases having sold it on.
Two claim forms were issued by SocGen in March and April 2008 and were purportedly served on the defendants in Turkey and Dubai. It was common ground that service had not been validly effected in Turkey. The position as to service in Dubai was contested, although ultimately found by the court also to have been ineffective.
Following the steps taken purportedly to effect service, SocGen took no active steps to progress the claim in England, but instead focused on lengthy litigation against the defendants in Turkey.
In February 2016 the defendants applied for orders that the claim forms be struck out or dismissed on the grounds that they had not been served and the time for doing so under CPR 7.5 had expired or, alternatively, that the failure to progress the claims amounted to an abuse of process. In response, SocGen applied for an order for deemed service by an alternative method (under CPR 6.15) or an order dispensing with service (under CPR 6.16).
The court considered both applications and summarised the relevant principles, drawing on the existing authorities:
- As the wording of CPR 6.16 makes plain, the court will dispense with service only in exceptional circumstances.
- In deciding whether to allow service by an alternative method under CPR 6.15, the test that the court must apply is whether there is a "good reason", considering all relevant factors and weighing them against one another.
- A critical factor is whether the defendant has learned of the existence and content of the claim form: "playing technical games" will count against a party, because the function of service is to bring the content of the document to the attention of the defendant. However, the simple fact that a defendant knows of the existence and contents of the claim form is not enough.
- There should be an enquiry into whether the claimant could have effected proper service within the relevant time period and, if so, why it did not.
- Delay in making an application is an important factor, particularly if the delay is such that it precludes any application for an extension of time of the validity of the claim form being made (which requires a claimant to have taken reasonable steps to serve the claim within the period of validity of the claim form).
- Delay amounting to abuse of process will rarely ever be compatible with there being a good reason to grant relief.
- Where an order under CPR 6.15 would or might deprive the defendant of a limitation defence, the good reason test is still the touchstone. It is not a good reason if the claimant's intent is simply to hold up proceedings while litigation is pursued elsewhere or to await some future development.
- Where service would be required under the Hague Convention or another treaty, the fact that complying with the relevant formalities will involve time and cost will normally not be a good reason. It will also be relevant whether the method of service on which the claimant seeks to rely is one recognised by the Hague Convention or other relevant treaty. If not, exceptional circumstances will be required.
- The fact that a claimant is a litigant in person is not on its own a good reason.
The court found that the facts pointed strongly towards there being no good reason for granting relief under CPR 6.15, and "still less" for dispensing with service. SocGen's failure to effect service within the period of validity of the claim forms was culpable; even if it was the result of negligent Turkish law advice, that did not absolve SocGen. Further, SocGen took a conscious decision to recover the sums due not in England, but rather in Turkey by means of insolvency proceedings. SocGen was under a positive obligation to help the English court to ensure that the claim was dealt with expeditiously, but it failed to do this.
Accordingly, SocGen's applications were dismissed and – the lack of service not being curable – the claims were struck out.
The case is likely to be a rarity on its facts, given the extreme circumstances. However, it does serve as a reminder that the English court reacts with displeasure to its processes being abused and that the purpose of issuing a claim form is not to warehouse a claim at the claimant's convenience pending developments elsewhere or in other proceedings. As the Court of Appeal put it in a prior case:(2) "It is for the court and not for one of the litigants to decide whether there should be a stay."
For further information on this topic please contact Andy McGregor or Chris Ross at RPC by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
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