A deputy judge has held that deemed submission to the jurisdiction by failing to challenge jurisdiction on time is not a sanction, so no question of relief from sanction arises on a late application. The Mitchell case is relevant, however, as compliance with time limits is considered more important than before: Zumax Nigeria Limited v First City Monument Bank Plc [2014] EWHC 2075 (Ch). Although judgment was given before the Court of Appeal reinterpreted Mitchell in its decision in Denton (see post), the decision remains of interest as, even post-Denton, compliance with rules and court orders is of particular importance.

The case is also of interest in expressing the view, obiter, that:

  • The defendant’s application for access to a third party’s documents under the Bankers Books Evidence Act was a submission to the English jurisdiction, even though made after a challenge to the jurisdiction had been issued.
  • Submission did not prevent the defendant from seeking a stay on forum conveniens grounds, ie arguing the courts of another country were more appropriate to hear the case.

The key message is that parties wishing to challenge the jurisdiction of the English courts should apply promptly and, whenever possible, within the time limits in CPR 11. Until the challenge is determined, they should not take any steps in the proceedings which could be interpreted as a submission to the jurisdiction.

Background

The case concerns a claim made by a Nigerian company against a Nigerian bank for the return of funds transferred to certain accounts in London which were not ultimately received by the company.

Permission to serve outside the jurisdiction was granted and service took place in Nigeria. Time for challenging the jurisdiction was extended by agreement to 5 December 2013. On 4 December the defendant sought a further extension from the claimant. This was refused on 6 December. The defendant applied to court for an extension of time at 16.16pm the same day. On 11 December the defendant issued a substantive application to challenge the jurisdiction but no evidence was served at this stage in support of either application. In April 2014 the defendant made an application under the Bankers Books Evidence Act against another bank involved in the money transfer.

CPR 11(5) provides that if a defendant files an acknowledgment of service but does not apply to challenge jurisdiction within the relevant time limit he is to be treated as having accepted that the court has jurisdiction to try the claim.

Decision

The Deputy Judge refused the application to extend time as well as the substantive application.

He followed the comments of Lord Collins in the Privy Council case of Texan Management Ltd v Pacific Electric Wire and Cable Company Ltd [2009] UKPC 46 in holding that the deemed submission of the defendant through failure to challenge jurisdiction on time was not a sanction, and therefore the rules on granting relief from sanctions (at CPR 3.9) did not apply.

He held there is power to extend time to challenge jurisdiction even where the time limit has expired (see in particular Chris Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch)), but declined to grant the extension sought. Whilst Mitchell did not apply, it did have some relevance as it provided an indication of the present policy of the courts in treating time limits as more important than was previously the case. This could not be viewed as an unimportant time limit given the effect of non-compliance. The judge took into account a number of factors in refusing the extension including delay, absence of evidence in support of the applications until late in the day and evidence that indicated little substantive work could have been done until after the agreed extension expired as the defendant did not at that stage have the witness statement in support of the application to serve out of the jurisdiction.

In case the judge was wrong regarding the extension, he went on to consider whether the defendant had submitted to the jurisdiction by applying for documents against a third party under the Bankers Books Evidence Act. He decided it had. The application was made after the challenge to the jurisdiction had been made but made no reference to that challenge and contained no reservation of position. Indeed the application asserted that the documents were needed in order to help the defendant to meet the allegations of fraud made against it, to narrow the issues in contention and “to ensure that all matters are before the court”.

He also considered whether, if the defendant had submitted or was deemed to have submitted, there remained a discretion to stay the English proceedings on the basis that Nigeria was clearly the appropriate forum for resolution of the dispute. There were conflicting dicta in the cases; Lord Collins in the Chris Sawyer case appeared to suggest this was possible whereas Lord Neuberger in Ledra Fisheries Ltd v Turner [2003] EWHC 1049 (Ch) at 18 appeared to suggest the defendant had lost the right. The deputy judge, with some hesitation, decided the approach of Lord Collins was correct. However this wasn’t material to the outcome as, on the facts, the judge formed the view that England was the appropriate forum for resolution of the dispute.

Comment

The deputy judge noted that he had not been shown any case which considered applications for an extension of time to challenge jurisdiction in the post-Mitchell era. In SET Select Energy GMBH v F & M Bunkering Limited [2014] EWHC 192 (Comm), Blair J in the Commercial Court appears to have assumed that an application for relief from sanctions under CPR 3.9 was an appropriate route for obtaining a retrospective extension of time for challenging jurisdiction, and so the Mitchell guidance applied.

In that case the Mitchell guidance supported the grant of relief, as the applicant had only narrowly missed the deadline, but it was argued that the application for relief could not be entertained by the court as it was not supported by evidence. The judge concluded however that CPR 3.9 was not the only route by which time could be extended; in The Alexandros T [2013] UKSC 70, the Supreme Court stated expressly that the time limit under CPR 11(4) can, in an appropriate case, be extended under the court’s general powers of management at CPR 3.1(2)(a).