Asefa Yesuf Import and Export and ors v (1) A.P. Moller-Maersk A/S t/a Maersk Line and (2) Maersk Line A/S t/a Safmarine

Judgment of the High Court, 16 June 2016

The High Court has handed down judgment in this case, which will be of interest to claimants litigating disputes against defendants in the European Union. It centres on the nature of EU Regulation 1393/2007 (the "Service Regulation") and the English Court's approach to curing defects in service under it.

Alexander Thompson, of 20 Essex Street, represented the successful Defendants in the High Court.

The Dispute

The Claimants ("Cargo") were Ethiopian shippers who export agricultural products. On 20 July 2014, the First Defendant ("Owners") issued six bills of lading to Cargo in respect of cargoes of rapeseed cake loaded on board the m.v. PATRICIA SCHULTE, for shipment to Tianjin, China.The contracts of carriage contained in or evidenced by the bills incorporated a one-year substantive time bar, and an exclusive jurisdiction clause in favour of England. Owners alleged that, while at sea, fires occurred in two containers contained on board another of the Owners' vessels, m.v. MAERSK DUBROVNIK, also containing rapeseed cake for carriage from Ethiopia via Djibouti to Tianjin, China.As a result, on or about 19 August 2014 the Owners decided to discharge Cargo's containers at Tanjung Pelepas, Malaysia on the grounds that the cargo stuffed into the containers was undeclared "dangerous cargo" prone to selfignition. Cargo said that Owners were not entitled to do so and that Owners should have carried the cargoes to their destination, and that this amounted to a breach of the contracts of carriage.

Procedural history

On 18 August 2015, the day before the one-year time bar potentially expired, Cargo issued a claim form in the Admiralty Court in England (the "Claim Form"). Pursuant to CPR 7.5, the latest date for serving the Claim Form outside the jurisdiction was 18 February 2016.

On 1 December 2015, Cargo's English solicitor telephoned the Owners' head office in Copenhagen and asked whether they had a lawyer in the UK on whom they could serve the Claim Form. Owners informed her that they did not, and that Cargo would have to serve the Claim Form on them in Denmark.

On 27 January 2016, another of Cargo's English solicitors travelled to Copenhagen and handed the Claim Form, the Particulars of Claim, a notice for service out of the jurisdiction, and part of a response pack (but no Acknowledgment of Service) to an individual at the head office of Owners, whose lawyer signed a receipt for the documents.

On 17 February 2016, Owners filed an Acknowledgment of Service stating their intention to contest the jurisdiction of the English Court, followed by a Part 11 application on 16 March 2016.

On 5 May 2016, Cargo made counterapplications seeking orders declaring service to be valid under CPR 6.15 or 3.10, and on 18 May 2016 Cargo applied for an order dispensing with service under CPR 6.16.

Service framework

As is well known, a claimant is entitled to serve proceedings on a defendant outside the jurisdiction if the claim is one the English court has power to determine under the Lugano Convention, the Judgments Regulation, or the 2005 Hague Convention. Otherwise, the claimant requires the permission of the Court to serve the proceedings: see CPR 6.33 and 6.36.

The question then is how a claim form if a claimant is to serve proceedings on the territory of a Member State, he must serve under the Service Regulation, which is a mandatory and exhaustive regime for these purposes. As the Judge noted , this is a "trap for the unwary", since this fact is not referred to in the CPR or in the White Book commentary.

If the claim form is not validly served on the defendant, the English court may set aside the purported service. However, if the step taken to effect service is an error of procedure within the meaning of CPR 3.10, the step taken is not invalid until the court makes that order: see CPR 3.10(a).

The issues

Out of these facts, the following issues arose: (1) whether Cargo's English solicitor had validly served the claim form under Article 15 of the Service Regulation; (2) if not, whether the Court should cure the error by making the orders requested under CPR 6.15, 6.16 or 3.10; and (3) if it should make the orders, whether as a matter of EU law the English court had the power to do so.

The Judgment

The Judge agreed with Owners that the answer was "no" to all three issues.

  1. Service

On the first issue, the Service Regulation provides a number of ways to serve judicial documents on the territory of another Member State.The primary method is to employ the transmitting and receiving agencies of the relevant state, but by Article 15 claimants or their legal representatives are entitled to serve documents directly on a defendant "through the judicial officers, officials or other competent persons of the Member State addressed, where such direct service is permitted under the law of that Member State". Under Article 23 of the Regulation, States are obliged to notify the Commission of the information referred to in (among other Articles) Article 15, and Denmark had made a notification in English and Danish that "Direct service through judicial officers [bailiff, in the Danish version] is permitted under Danish law". Cargo argued that in Danish law private persons, including solicitors, were entitled to serve proceedings directly on defendants in Denmark, and "as such" an English solicitor was a competent person "in the eyes of " Denmark. The Judge disagreed. He held3 first, that as a matter of the autonomous interpretation of Article 15, the words "competent person of the Member State addressed" could not include a solicitor from the state of origin, as opposed to destination; and second, that whatever the Danish law position for domestic process, the best evidence of Danish law regarding foreign process was the mandatory notification under Article 23, which he did not accept was likely to be "merely illustrative", as Cargo had argued. In addition, this position was consistent with Denmark's stance under the Hague Service Convention.

  1. Curing service

On the second issue, the Judge carefully considered the factors relied upon by the parties in light of the principles guiding the court's discretion under CPR 6.15 set out by the Supreme Court in Abela v Baadarani [2013] 1 WLR 2043 and recently summarised by the Court of Appeal in Barton v Wright Hassall LLP [2016] EWCA Civ 177, at [19]. The test under CPR 6.15 is whether there is a "good reason" to declare that steps taken to serve the claim form were effective service.The Judge noted that although it is a critical factor, it is not sufficient in itself that the claim form has come to the attention of the defendant (see Abela at [36]), and the fact that Owners received the claim form and passed it on to their lawyers, who acknowledged service and contested jurisdiction, were all aspects of this factor.The Judge assessed the circumstances of the case and concluded that there was no good reason why Cargo's solicitors could not have served the Claim Form in time, and that "This was, in my judgment, a case of Cargo's solicitors leaving service of the claim form late and then not observing the rules for service".

The Judge relied 4on the following factors: (i) service was made late in the day; (ii) it was not served by a method in the Regulation; (iii) service in Denmark was straightforward under the Regulation; (iv) Owners had acted with due propriety and had not evaded service; (v) there were numerous other errors of procedure admitted on behalf of Cargo; and (vi) Cargo's solicitors had not obtained legal advice in time to determine the proper method of service in Denmark.

Importantly, readers should note that the Court gave5 no weight to factors such as the impact of the time-bar, the fact that the error was by Cargo's representatives, or that there might arise a claim for damages against the solicitors that might be hard to quantify, as "they are a consequence of what was not done on Cargo's behalf, cannot be laid at Owners' door, and in my judgment do not amount to a good reason why the steps taken to serve Owners should be validated".

Similarly, the Judge held6 that there were no "exceptional circumstances" to dispense with service under CPR 6.16 and 7that CPR 3.10 should not be used to declare steps taken to effect service to be valid or to dispense with service.This was either on the basis of (i) Cargo's concession that there was no procedural error, as service was properly to be characterised as an impermissible method of service (not a permissible method carried out poorly), or (ii) on Owners' case that such an order could only be granted in accordance with the specific criteria in CPR 6.15 and 6.16, which were not met. 8

  1. English court's powers to cure service

Finally, the Judge agreed that in any event national courts did not have power to use national rules to cure service by a method that was outwith the Service Regulation, on the basis that it was inconsistent with the mandatory and exclusive nature of the regime.

Applying the test of the European Court of Justice in C-443/03 Leffler v Berlin Chemie AG, at [49 52], the Judge held 9that service by an English solicitor under Article 15 is properly characterised as an impermissible method of service outside the Service Regulation which was inconsistent with the principle in Alder. However, the Court did accept that "if there was service within Article 15 with minor errors of procedure then English CPR Rules such as CPR 6.15, 6.16 and 3.10 could be deployed".

Conclusions

In the result, the Court declared that it had no jurisdiction, set aside the Claim Form and service of the Claim Form, and dismissed Cargo's applications under CPR 6.15, 6.16 and 3.10.

Standing back, this judgment is interesting for a number of reasons.

Practically, it is a helpful reminder that where a claim form is to be served on a defendant in the EU, the Service Regulation must be used. It is also helpful as a reminder of the strict approach that the Courts adopt where claimants or their representatives fail to properly serve proceedings in time, even if it means the claims may be time barred.

From a legal view, it decides or confirms three notable points. First,Article 15 has an autonomous meaning with its own criteria, and does not operate as a choice of law rule.That is, the question is not simply what the Member State's procedural rules provide in respect of service within the jurisdiction.The relevant enquiry is what provision the Member State has made for service of foreign proceedings under the Regulation specifically.

Secondly, relief under CPR 3.10 for an order in the same terms as CPR 6.15 or 6.16 will only be made where the criteria in those specific provisions are met.

Thirdly, where service can be characterised as "outwith" the Regulation, the powers of the lex fori to remedy defects in service are ousted by the Service Regulation as a matter of EU law.